AMD records $1B quarterly charge tied to warrants issued to OpenAI, Meta - TradingView
By Google News AI ·
AMD AMD recorded a third-quarter charge of more than $1B tied to the performance-based stock warrants it issued to major AI customers OpenAI OPENAI and Meta META.
The chipmaker struck deals with OpenAI OPENAI and Meta META, agreeing to supply them chips in exchange for warrants that could let them buy up to 10% of AMD AMD if it meets certain milestones.
"In Q3, we began recognizing the accounting impact of warrants issued under our previously announced customer agreement as we shipped MI450 Series GPUs," AMD AMD CFO Jean Hu said in an earnings call.
She noted that AMD's AMD GAAP EPS of $1.46 included "$1.1B noncash charge in other income and expense, primarily reflecting the increase in our share price and the changes in the estimated probability of meeting the warrant conditions."
Hu said these quarterly noncash fair value adjustments are expected to increase going forward as AMD AMD and its customers progress under the chip supply deals. "These noncash adjustments would not affect our non-GAAP results or free cash flow."
The warrants highlight the AI boom's circular financing, where companies can act as suppliers, customers and investors for one another simultaneously.
But such deals risk diluting AMD AMD shareholders, as OpenAI OPENAI and Meta META could own a significant stake in the company once the warrants fully vest and are exercised. This could substantially increase AMD's share count.
Hu said AMD AMD would provide guidance in 2027 on when the customers meet vesting and exercise conditions.DisclaimerContent provided by Seeking Alpha is intended for information purposes only, and that Seeking Alpha does not offer any personalist investment advice and is not a licensed securities dealer, broker, US investment adviser or investment bank.
Originally published by Google News AI