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				Nine Months Ended
	October 29, 2017		October 30, 2016		October 29, 2017		October 30, 2016
	(In millions)
Cost of revenue	$	6	$	2	$	14	$	10
Research and development	61		36		146		95
Sales, general and administrative	40		27		105		71
Total	$	107	$	65	$	265	$	176

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)	6		$	142.34	—		$	—
Exercised	—		$	—	(2	)	$	14.46
Vested	(10	)	$	26.88	—		$	—
Balances, October 29, 2017	23		$	64.42	5		$	14.47


(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 that 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 third quarter and first nine months of fiscal year 2018, we estimated that the stock-based compensation expense related to equity awards that are not expected to vest was $105 million and $144 million, respectively. Of the total fair value of equity awards granted during the third quarter and first nine months of fiscal year 2017, we estimated that the stock-based compensation expense related to equity awards that are not expected to vest was $72 million and $89 million, respectively.

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



	October 29,		January 29,
	2017		2017
	(In millions)
Aggregate unearned stock-based compensation expense	$	1,153	$	627

Estimated weighted average remaining amortization period	(In years)
Stock options	—		0.5
RSUs, PSUs, and market-based PSUs	2.5		2.6
ESPP	0.7		0.6