AMD's OpenAI and Meta Deals Come With a $1 Billion Catch - Yahoo Finance
By Google News AI ·
This article first appeared on GuruFocus.
In the third quarter, Advanced Micro Devices Inc. (AMD, Financials) reported a $1.1 billion noncash charge that was mostly related to stock warrants issued under its supply agreements for artificial intelligence chips with OpenAI and Meta.
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Although the charge had an impact on reported earnings, the company's cash flow was unaffected.
According to Chief Financial Officer Jean Hu, the cost represented shifts in AMD's stock price as well as the projected likelihood that clients will fulfilll the terms of the warrants.
Including the penalty, AMD reported earnings of $1.46 per share using generally accepted accounting standards.
As it dispatched MI450-series graphics processing units in accordance with client agreements, the company started to recognize the accounting impact.
If performance and other contractual objectives are met, the warrants allow OpenAI and Meta to obtain sizeable stock shares.
The arrangements strengthen AMD's commercial ties with major AI customers but introduce potential dilution for existing shareholders.They also highlight how AI suppliers are using equity incentives to secure long-term demand.
Originally published by Google News AI
