$1.07 Billion Non-Cash Charge Tied to AMD Warrants for OpenAI and Meta
Key Facts
AMD reported a non-cash charge of $1.07 billion, or 66 cents per share, in the third quarter ended September 26, 2026, Reuters reported. The charge is tied to stock warrants the company issued to OpenAI and Meta under two agreements to supply AI chips. It was recorded as shipments linked to the agreements began to ramp up, according to Reuters. AMD said the quarterly revaluation of the warrants is affected by changes in its share price and other valuation assumptions. The charge shows how the value of warrants can affect reported profitability even as operating activity grows.
Reuters said the charge was non-cash and related to fair-value accounting for the warrants during the quarter. AMD said its share price and other valuation assumptions factor into the quarterly revaluation, making the value of the item dependent on market and accounting factors. Meanwhile, shipments under the two agreements began to expand during the same period, according to Reuters. The warrants allow OpenAI and Meta to buy AMD shares once vesting and exercise conditions are met. The partnerships thus combine chip-supply commitments with the possibility of the companies acquiring shares in AMD.
The background to the warrants dates to an earlier AMD disclosure, which said the company had issued a warrant to each of OpenAI and Meta allowing them to buy up to 160 million shares at an exercise price of $0.01 per share. The warrants were unvested and could not be exercised as of June 27, 2026, according to the company’s filing with the U.S. Securities and Exchange Commission. AMD tied the vesting of tranches to specified purchase milestones for Instinct GPU units. Each vested tranche is also subject to additional technical and commercial conditions before it can be exercised. The ability to buy the shares remains conditional on those requirements being met, according to the disclosure.
The two warrants differ in their share-price terms: the OpenAI warrant includes thresholds tied to AMD’s share price, while the Meta warrant does not, according to Reuters. In February 2026, AMD announced an agreement to sell Meta up to $60 billion worth of AI chips over five years. The agreement gave Meta the option to acquire up to 10% of the chipmaker, Reuters reported. The earlier OpenAI agreement was similar to the Meta agreement, according to the same report. These deals reflect a wave of supply agreements linked to strong demand for processors from the AI sector, Reuters reported.
Analyst Bob O’Donnell said, "There is pent-up demand for a serious alternative to Nvidia," adding that AMD products had begun competing on price and performance measures. Reuters noted that Meta also struck a separate deal to buy AI chips from Nvidia. This competition puts AMD’s contracts with OpenAI and Meta in the context of AI companies seeking to secure processors. At the same time, exercising the warrants after their conditions are met could dilute existing shareholders’ ownership. AMD said the vesting and exercise conditions include shipment and commercial requirements, according to Reuters.
AMD shares closed at $483.90 on November 3, 2026, while Meta shares closed at $621.03 the same day, according to EL7 data. AMD shares rose 8% in extended trading, according to a Reuters report published on November 3, after the company forecast faster-than-expected growth for 2027 and strong data-center sales. AMD said it expects to provide further guidance in 2027 on when the warrant conditions could be met. This includes the conditions that would allow OpenAI and Meta to vest and exercise the shares. The expected guidance update comes after shipments linked to the agreements began to expand.