Stock-Based Compensation

Our stock-based compensation expense is associated with stock options, restricted stock units, or RSUs, performance stock units that are based on our corporate financial performance targets, or PSUs, performance stock units that are based on market conditions, or market-based PSUs, and our employee stock purchase plan, or ESPP.

Our Condensed Consolidated Statements of Income include stock-based compensation expense, net of amounts capitalized as inventory, as follows:



	Three Months Ended				Six Months Ended
	July 30, 2017		July 31, 2016		July 30, 2017		July 31, 2016
	(In millions)
Cost of revenue	$	4	$	4	$	8	$	8
Research and development	44		30		85		59
Sales, general and administrative	33		24		65		44
Total	$	81	$	58	$	158	$	111

Equity Award Activity

The following is a summary of equity award transactions under our equity incentive plans:



	RSUs, PSUs, and Market-based PSUs Outstanding				Options Outstanding
	Number of Shares		Weighted Average Grant-Date Fair Value Per Share		Number of Shares		Weighted Average Exercise Price Per Share
	(In millions, except per share data)
Balances, January 29, 2017	27		$	32.84	7		$	14.47
Granted (1) (2)	3		$	106.65	—		$	—
Exercised	—		$	—	(1	)	$	14.51
Vested	(5	)	$	21.06	—		$	—
Balances, July 30, 2017	25		$	42.54	6		$	14.46


(1)	Includes PSUs that will be issued and eligible to vest if the corporate financial performance maximum target level for fiscal year 2018 is achieved. Depending on the actual level of achievement of the corporate performance target at the end of fiscal year 2018, the PSUs issued could be up to 0.6 million shares.

(2)

Includes market-based PSUs that will be issued and eligible to vest if the maximum target for total shareholder return, or TSR, over the 3-year measurement period is achieved. Depending on the ranking of our TSR compared to the respective TSRs of the companies comprising the Standard & Poor’s 500 Index during a 3-year measurement period, the market-based PSUs issued could be up to 0.1 million shares.

Of the total fair value of equity awards granted during the second quarter and first half of fiscal year 2018, we estimated that the stock-based compensation expense related to equity awards that are not expected to vest was $10 million and $39 million, respectively. Of the total fair value of equity awards granted during the second quarter and first half of fiscal year 2017, we estimated that the stock-based compensation expense related to equity awards that are not expected to vest was $5 million and $17 million, respectively.

The following summarizes the aggregate unearned stock-based compensation expense and estimated weighted average amortization period as of July 30, 2017 and January 29, 2017:



	July 30,		January 29,
	2017		2017
	(In millions)
Aggregate unearned stock-based compensation expense	$	697	$	627

Estimated weighted average remaining amortization period	(In years)
Stock options	0.1		0.5
RSUs, PSUs, and market-based PSUs	2.4		2.6
ESPP	0.6		0.6