AMD's OpenAI, Meta chip deals trigger $1 billion quarterly charge

Advanced Micro Devices (AMD) has faced a $1.07 billion non-cash charge in the third quarter, stemming from warrants granted to major AI customers OpenAI and Meta Platforms. In exchange for these significant chip commitments, AMD offered stakes in its future success to the companies. In February, AMD sold up to $60 billion worth of AI chips to Meta over five years, granting Meta warrants to potentially buy up to 10% of the chipmaker if it meets certain milestones.

A similar deal with OpenAI last year allowed the startup to purchase up to roughly 10% of AMD. The warrants are part of a trend among chip and AI cloud companies using equity incentives to secure long-term purchases from a select group of AI customers, reflecting the interconnected nature of the AI boom where companies can be both customers and suppliers.

While AMD expects faster-than-expected 2027 growth due to surging data-center sales, the strategy could dilute AMD shareholders as OpenAI and Meta could own substantial stakes in the chipmaker if the warrants fully vest and are exercised.