AMD Books $1.07 Billion Charge for OpenAI and Meta Warrant Deals

By Sophie Lindqvist

AMD recorded a $1.07 billion non-cash charge in its third quarter, or 66 cents per share, to account for warrants granted to OpenAI and Meta Platforms. The charge, disclosed Tuesday for the quarter ended September 26, lands exactly as shipments under those chip agreements begin to ramp. That is the cost of buying volume with equity.

The Sunnyvale-based chipmaker also forecast faster-than-expected growth in 2027, driven by surging data-center sales. Investors liked the message. AMD shares rose 8% in extended trading, and the rally spread to Intel, Nvidia and Broadcom.

What did AMD give away?

The structure is simple and, for shareholders, expensive. In February, AMD agreed to sell up to $60 billion worth of AI chips to Meta over five years, and gave the Facebook owner warrants that could let it buy as much as 10% of the chip firm if certain milestones are met. The deal followed a similar agreement with OpenAI last year, giving the startup the option to buy up to roughly 10% of the chipmaker.

The terms deserve scrutiny. If the warrants fully vest and are exercised, OpenAI and Meta could each acquire a large stake in AMD for as little as a penny per share. The warrants' ultimate value depends on AMD's share price at exercise. There is also an asymmetry in the fine print: OpenAI's warrant includes share-price thresholds. Meta's does not.

The dilution math is not yet quantified. AMD finance chief Jean Hu said on Tuesday's analyst call that the warrants would begin diluting shareholders only once OpenAI and Meta satisfy vesting and exercise conditions, which include shipment and other commercial requirements. AMD expects to provide more guidance in 2027 on when those conditions could be met, she said.

Why is this payment-in-equity spreading?

The warrants are part of a growing pattern. Chip and AI cloud companies now use equity incentives to secure massive, long-term purchases from a small group of AI customers. The deals also expose a circularity at the heart of the AI boom: the same companies can be customers, suppliers and investors in one another simultaneously. AMD, for its part, has struck a chip-purchase arrangement with OpenAI rival Anthropic — but that agreement ran the other way, with AMD committing to invest in Anthropic.

Comparable deals include:

• Cerebras granted OpenAI warrants against a $20 billion chip commitment.
• Marvell issued Alphabet's Google warrants worth a potential $12.2 billion stake.
• Qualcomm gave Amazon warrants in a $60 billion deal for its AI data-center chips.

Does this threaten Nvidia?

Analysts say the deals signal real confidence in AMD's AI chips and software. They also say it will not dent Nvidia's dominance, because the market leader continues to sell every AI chip it can make. Confidence in an alternative is not the same as a change in market share.

Bob O'Donnell, chief analyst at TECHnalysis Research, put it directly: "While I do believe incentives played a role in some of their sales, I believe the bigger issue is that there is pent-up demand for a serious alternative to Nvidia and AMD's products are now starting to compete on price/performance metrics."

That claim is partly untested. How much of AMD's data-center momentum comes from price and performance, and how much from warrants priced at a penny, is a question neither AMD nor its customers have answered with numbers. The company reports revenue growth; it does not report what that growth cost in future equity.

What happens next?

The dilution clock starts only when shipment and commercial conditions are met, and AMD has promised guidance in 2027. Until then, the $1.07 billion charge stands as a booked expense against revenue that AMD says will accelerate — and as a reminder that in this market, capacity commitments are being purchased with ownership, not just cash.