AMD Accounting Red Flags Continue

Trouble in the AI Chip Bubble

(Financial Risk Analysis – February 2025)

Wall Street has been here before—irrational exuberance, sky-high valuations, and companies leveraging financial smoke and mirrors to keep the dream alive.

At $119 per share, Advanced Micro Devices (NASDAQ: AMD) is priced for perfection, boasting a near-100 P/E ratio that assumes limitless AI-driven growth. But beneath the AI-fueled hype lies a more ominous truth: AMD’s latest earnings reveal a dangerous game of financial engineering, growing signs of business weakness, and a valuation detached from reality.

Investors should ask themselves: Are we witnessing another overhyped tech darling poised for a brutal correction?

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1. The Accounting Tricks That Should Make You Nervous

Red Flag #1: Rising Accounts Receivable – The Illusion of Growth

• AMD’s accounts receivable have surged—this means the company is booking revenue before the cash actually arrives.

• Classic corporate scandals have used this tactic to artificially inflate growth.

• Meanwhile, cash flow from operations is declining, a textbook sign that revenue may be pulled forward to meet Wall Street’s expectations.

Red Flag #2: A Disturbing Inventory Build-Up – A Sales Slowdown?

• AMD’s inventory levels have swelled, signaling that products—especially AI chips—aren’t moving as fast as expected.

• Excess inventory leads to write-downs, which will eventually hammer future earnings.

• If AMD’s MI300 AI chips were truly in high demand, why is inventory stacking up instead of flying off the shelves?

Red Flag #3: Deferred Revenue Shenanigans – Manipulating Earnings?

• AMD appears to be shifting revenue recognition between quarters, a tactic that can create the illusion of steady growth.

• If AI and data center demand were truly skyrocketing, AMD wouldn’t need to massage the numbers.

  (AMD Financial Statement below)

  

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