The deals that AMD signed with Meta and OpenAI were part of the growing trend of giving equity incentives for long-term contracts from a small group of AI customers.
Advanced Micro Devices (AMD) had to incur a $1.07 billion non-cash charge in the third quarter ending September 2026, because of warrants given to long-term customers like Meta and OpenAI for artificial intelligence (AI) chips.The charge could account for 66 cents per share.
AMD in February signed a deal with Meta to sell $60 billion worth of AI chips, over five years. The deal allows Meta to buy as much as 10 per cent of the chipmaking firm, if certain milestones are met. In a similar deal last year, OpenAI was given warrants by AMD, which allowed it to buy 10 per cent of the chipmaking firm. The ultimate value of the warrants is dependent on the share price of AMD, when the warrants are exercised.
The deals were part of the growing trend of giving equity incentives for long-term contracts from a small group of AI customers, highlighting the circular nature of the AI boom. While some analysts view the deals as a vote of confidence in AMD’s chipmaking capacities, it’s highly unlikely that these can challenge the market leadership of Nvidia. Moreover, the strategy risks diluting AMD shareholders, with Meta and OpenAI owning huge shares in the company at as little as a penny a piece if the warrants are fully exercised.
AMD finance chief Jean Hu stated on Tuesday that the company will begin diluting the shareholdings once the shipments of the chips are concluded and exercise conditions are satisfied. The company will provide more guidance in 2027 when the conditions will be met.
Similar equity deals include Celebras granting warrants to OpenAI against a $20 billion commitment, Marvell issuing warrants to Google for a potential $12.2 billion stake sale, Qualcomm giving warrants to Amazon for $60 billion AI data centre chips and AMD committing to invest in Anthropic, with the AI firm purchasing AMD’s chips.
