AMD's OpenAI and Meta Deals Come With a $1 Billion Catch

What happened

AMD reported a $1 Billion noncash charge in the third quarter, mostly related to stock warrants issued under chip supply agreements with OpenAI and Meta. The charge affected reported earnings but not cash flow; AMD reported earnings of $1.46 per share under accounting rules.

Confirmed

Global impact / market context

The warrants could let OpenAI and Meta obtain AMD shares if performance and other contract goals are met. That may help AMD secure ongoing chip orders, while issuing shares could reduce existing owners’ percentage of the company; the accounting charge itself does not use cash.

Analyst inference

AI suppliers are using stock-based incentives alongside chip supply deals to build relationships with major customers. AMD began recording the accounting effect as it shipped MI450-series chips, while any shares going to OpenAI or Meta depend on meeting contractual conditions.

Confirmed

What to watch

1. Watch for disclosures on whether OpenAI and Meta meet the warrants’ performance and other contract goals, the conditions that determine whether they can receive AMD shares. Analyst inference
2. Track AMD’s earnings reports and share count as it ships MI450-series graphics processors; the article says shipments began recognition of the accounting effect. Confirmed
3. Look for updates on AMD’s supply agreements and customer orders; stronger commitments could support chip sales, while share issuance could shrink existing owners’ percentage stakes. Analyst inference

Evidence

• gurufocus.com