The Deal With Meta & OpenAI Just Cost AMD $1.1 Billion - Yahoo Finance
By Google News AI ·
Advanced Micro Devices booked a $1.1 billion noncash charge in the third quarter tied to its chip deals with OpenAI and Meta Platforms, marking the first time the two agreements have hit the chipmaker's reported earnings. The deals give the companies the right to buy up to 320 million AMD shares for a penny apiece if they meet a series of milestones.
The charge, equivalent to 66 cents per diluted share in AMD's earnings reconciliation, came as the chipmaker began shipping its new Instinct MI450 accelerators. AMD reported $13.4 billion in quarterly revenue and $1.46 in diluted earnings per share. Adjusted earnings were $2.09 per share, a figure that excludes the warrant revaluation and other items. There was no comparable warrant charge in the previous quarter.
AMD signed its agreement with OpenAI in October 2025 and its deal with Meta in February. Each covers deployments of up to 6 gigawatts of AMD graphics processors, a measure of the scale of the planned AI infrastructure. As part of those agreements, AMD gave each customer a warrant, a contract that allows it to buy up to 160 million shares at a fixed price of 1 cent each.
Exercising all the warrants would cost OpenAI and Meta a combined $3.2 million. At AMD's Tuesday closing price of about $484, the underlying shares would have a market value of roughly $155 billion. Fully exercised, the warrants would give the two companies about 16% of AMD's enlarged share count. Issuing those shares would reduce existing investors' percentage ownership.
The shares vest in stages as customers reach purchase milestones and AMD meets stock performance targets. Each tranche also has technical and commercial conditions that must be satisfied before the customers can exercise it. AMD said in its quarterly filing that none of the…
Originally published by Google News AI