Advanced Micro Devices, Inc. (AMD)vs AVGO Holdings, Inc. (AVGO)

Quick verdict

Advanced Micro Devices, Inc. (AMD) and AVGO Holdings, Inc. (AVGO) appeal to different investors. On our six-factor framework, AMD scores 3 and AVGO scores 3. AVGO looks cheaper on the multiples that matter, while AMD grows faster and AVGO earns higher returns on capital. The two are evenly matched overall, so your priority — value, growth, income or safety — should decide it.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

Advanced Micro Devices, Inc. operates in Semiconductors (Technology), while AVGO Holdings, Inc. sits in Credit Services (Financial Services). The two operate in different sectors, so cyclicality and end-market exposure differ — factor that into any portfolio overlap. AMD carries a beta of 2.47 versus 1.30 for AVGO, meaning AMD has historically been the more volatile of the two.

Valuation

On valuation, AVGO is the cheaper stock. AMD trades on a forward P/E of 10.72 and EV/EBITDA of 91.47, against 17.33 and 17.22 for AVGO. Price-to-sales is 19.79 vs 9.76, and free-cash-flow yield is 6.5% vs 4.6%. A higher multiple is only justified if the company can sustain faster growth or wider margins, which is exactly what the next sections test.

Growth profile

AMD is the faster grower. AMD has compounded revenue at 34.3% over three years with EPS growth of 164.4%, while AVGO has delivered 20.9% revenue and 29.3% EPS growth. Growth like this is the single biggest driver of long-term returns, but it also tends to come with a richer valuation, so it must be weighed against the multiples above.

Profitability and quality

On profitability and quality, AVGO is stronger. AMD posts a 11.7% operating margin, 8.1% return on equity and 6.2% return on invested capital. AVGO posts 35.1%, 23.1% and 8.1% respectively. Return on invested capital above roughly 15% is a hallmark of a durable competitive advantage, so this metric deserves particular attention.

Balance-sheet risk

AMD has the safer balance sheet. AMD carries net-debt/EBITDA of 1.19x with a current ratio of 2.72, versus 3.11x and 0.83 for AVGO. Lower leverage gives a company more room to invest through a downturn and reduces the risk of dilution or distress.

Price performance and shareholder returns

Over the past year AMD returned 8.3% against 95.6% for AVGO; on a three-year annualised basis it is -2.0% vs 19.0%. AMD yields 3.5% and AVGO yields 0.0%. Past performance never guarantees future results, but the multi-year track record shows how the market has rewarded each business so far.

Which stock fits which investor

For value-oriented investors, AVGO is the better fit on today's multiples. Growth investors will likely prefer AMD, which is expanding faster. Income investors should lean toward AMD for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour AVGO for its superior returns on capital. This is a comparison of facts, not a recommendation — your time horizon, risk tolerance and existing holdings should drive the final decision.

• Value: AVGO
• Growth: AMD
• Income: AMD
• Quality: AVGO

Frequently asked questions

Is AMD or AVGO the better buy right now?

Neither is universally "better." AMD scores 3 and AVGO scores 3 on our six-factor framework. AVGO is cheaper, AMD grows faster, and AVGO is higher quality — so the right pick depends on your objective.

Which stock is cheaper, AMD or AVGO?

AVGO is the cheaper stock across forward P/E (10.72 vs 17.33), EV/EBITDA (91.47 vs 17.22) and price-to-sales (19.79 vs 9.76).

Which has grown faster, AMD or AVGO?

AMD has the stronger growth profile, with three-year revenue CAGR of 34.3% for AMD versus 20.9% for AVGO.

Which stock pays a bigger dividend?

AMD yields 3.5% and AVGO yields 0.0%, so AMD is the stronger income choice.

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