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

Advanced Micro Devices (AMD) announced a $1.07 billion non-cash charge in the third quarter to account for warrants granted to major AI customers OpenAI and Meta Platforms. These warrants, awarded in exchange for big chip commitments, could allow OpenAI and Meta to purchase up to 10% of AMD if certain milestones are met. The deals, made in February and last year, have spurred faster-than-expected growth in AMD's data-center sales, leading to a 66 cent share price increase for the chipmaker.

Analysts view the warrants as a strong endorsement of AMD's AI capabilities but doubt they will challenge Nvidia's market dominance. Other AI companies, including Cerebras, Marvell, and Qualcomm, have also utilized equity-linked deals with major customers.