AMD has recorded a $1.07 billion non-cash charge in its third quarter to account for warrants granted to OpenAI and Meta as part of agreements to supply artificial intelligence (AI) chips to the two companies.
The charge, equivalent to 66 cents per share, reflects the equity incentives AMD offered to secure large, long-term chip purchases. Under the arrangements, both OpenAI and Meta could acquire up to roughly 10% of AMD if they meet the required vesting and exercise conditions.
AMD has agreed to supply Meta with up to $60 billion worth of AI chips over five years. OpenAI has a similar arrangement with the chipmaker. The agreements are part of AMD’s effort to expand its position in the AI hardware market and secure demand from major technology companies.
The warrants could be exercised at prices as low as one cent per share. While the agreements help AMD secure substantial customer commitments, they also carry the possibility of diluting existing shareholders. The company is expected to provide further details about the potential dilution in 2027.
AMD has also forecast faster-than-expected growth in 2027, supported by demand for data-centre products. The outlook lifted its shares and those of other chipmakers.
The agreements reflect growing demand for alternatives to Nvidia in the AI chip market. However, analysts do not expect the deals to immediately challenge Nvidia’s current market dominance.
Equity-linked incentives are also becoming more common across the AI chip industry as companies compete to secure large customers and long-term demand.
