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Equity research analysts and investors remain divided on the treatment of stock-based compensation (SBC) in firm valuation, particularly in discounted cash flow (DCF) and earnings multiples techniques. Many firms and analysts exclude SBC, viewing it as a non-cash expense, while others argue this leads to overvaluation. SBC usage is especially high in the tech sector. This study examines five large semiconductor firms, analyzing SBC levels, its treatment in adjusted earnings, and its impact on share dilution, valuation multiples, and free cash flow calculations. Findings indicate that SBC treatment significantly affects valuation, particularly within the semiconductor industry.