The Deal With Meta & OpenAI Just Cost AMD $1.1 Billion

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 warrant shares had vested or become exercisable as of September 26, the end of the quarter.

Chief Financial Officer Jean Hu told analysts Tuesday that the initial MI450 shipments prompted AMD to start accounting for the warrants. The revaluation largely reflected a higher share price and changes in AMD’s estimate of how likely the customers were to meet the conditions. Hu said the charge could grow as the agreements progress, with AMD’s share price influencing the amount. The revaluation itself has no direct effect on free cash flow.

The filing also shows how the deals can affect the revenue line. AMD disclosed $4.5 billion in remaining grant-date warrant value that it expects to recognize as a reduction in revenue in proportion to qualifying sales to the two customers. That accounting treatment is separate from the quarterly revaluation that drove the $1.1 billion charge.

Demand for AMD’s data center chips helped push the segment’s revenue to a record $8.5 billion, up 97% from a year earlier. AMD expects about $17 billion in total fourth-quarter revenue, up roughly 66% year over year at the midpoint. CEO Lisa Su told analysts that the company expects revenue to grow more than 80% in 2027.

AMD is already spending to meet that demand. Inventory rose by about $3 billion from the previous quarter to roughly $11.5 billion, while free cash flow fell to $554 million from $1.56 billion. Total debt principal reached $7.1 billion after the company sold $4.75 billion in bonds in August and repaid $875 million in notes at maturity.