AMD Books $1.07 Billion Charge on OpenAI and Meta Warrants

Advanced Micro Devices booked a $1.07 billion non-cash charge, or 66 cents a share, in the third quarter ended September 26. The entry accounts for warrants AMD issued to OpenAI and Meta Platforms under its AI chip supply agreements, and it involves no cash outlay.

That's the headline number. Here's what sits behind it.

What did AMD give away?

In February, AMD agreed to supply up to $60 billion of AI chips to Meta over five years. Meta received warrants that could let it buy up to 10% of AMD if certain milestones are met.

AMD struck a similar arrangement with OpenAI last year. That deal gives the AI lab the right to acquire roughly 10% of the chipmaker under certain conditions.

If the warrants vest and are exercised, their value depends on AMD's share price at the time. The expense AMD recognises rises as shipments under the agreements increase.

What does this change for shareholders?

Dilution is the practical question, and AMD has an answer with a date attached. Chief financial officer Jean Hu told analysts on Tuesday that dilution will begin only after OpenAI and Meta meet the vesting and exercise conditions — shipment requirements and other commercial milestones. AMD expects to give more detail in 2027 on when those conditions may be met.

The market looked past the charge. AMD shares rose 8% in extended trading after the company projected faster-than-expected growth in 2027, helped by stronger data centre sales. Shares of Intel, Nvidia and Broadcom also gained.

A broader pattern in the AI supply chain

AMD is not alone in trading equity for purchase commitments. Other chip and cloud infrastructure companies have offered customers stakes in future upside in exchange for large, long-term orders.

• AMD has a chip-purchase deal with Anthropic that includes an AMD investment commitment into the AI company.
• Cerebras gave OpenAI warrants linked to a $20 billion commitment.
• Marvell issued Google warrants that could translate into a potential $12.2 billion stake.

The sums vary, but the structure repeats: warrants or investments tied to big, multi-year purchase volumes.

Incentives or genuine competition?

Bob O'Donnell, chief analyst at TECHnalysis Research, said incentives probably played a part in some sales, but the bigger driver is pent-up demand for a credible alternative to Nvidia. AMD's products, he said, are competing better on price and performance.

Analysts read the warrants as a signal of confidence in AMD's AI hardware and software. They don't necessarily weaken Nvidia's hold on the market, the analysts said.

So the charge is a bookkeeping entry, not a cash event. The real cost — potential dilution of up to roughly 10% per deal — only lands if OpenAI and Meta hit their milestones and exercise. Until 2027 brings clarity on timing, investors are pricing AMD on data centre growth, and on Tuesday they liked what they saw.