AMD's OpenAI and Meta Chip Deals Trigger $1 Billion Quarterly Charge

Advanced Micro Devices (AMD) recorded a $1.07 billion non-cash charge in the third quarter of 2026 as its major artificial intelligence chip agreements with OpenAI and Meta begin to affect its financial results.

The charge, equivalent to 66 cents per share, relates to warrants AMD granted to the two technology companies as part of long-term agreements to secure large purchases of its AI processors. The arrangements give OpenAI and Meta the opportunity to acquire significant stakes in AMD if specified commercial and performance milestones are achieved.

The development highlights the increasingly complex financial relationships between AI chip suppliers and the technology companies investing heavily in computing infrastructure.

AMD Uses Equity Incentives to Secure Major AI Customers

AMD has adopted equity-linked incentives to strengthen its position in the competitive AI chip market.

In February 2026, the company agreed to supply Meta with up to $60 billion worth of AI chips over five years. As part of the agreement, Meta received warrants that could allow it to purchase up to approximately 10% of AMD, subject to specified conditions.

A similar arrangement was previously established with OpenAI, giving the AI company the opportunity to acquire a stake of up to roughly 10% in the chipmaker.

These agreements are designed to secure long-term demand for AMD's processors while helping major AI companies obtain access to the computing capacity required for their expanding infrastructure.

Shareholder Dilution Becomes an Important Concern

Although the agreements provide AMD with substantial commercial opportunities, they also introduce potential risks for existing shareholders.

If OpenAI and Meta meet the required conditions and exercise their warrants, AMD could issue additional shares, reducing the ownership percentage of existing investors.

AMD Chief Financial Officer Jean Hu said the warrants would begin affecting shareholder ownership once the relevant vesting and exercise conditions are satisfied. These conditions include shipment volumes and other commercial milestones.

The company expects to provide further guidance on the potential timing of these developments in 2027.

Data Centre Demand Supports AMD's Growth Outlook

Despite the billion-dollar accounting charge, AMD reported strong third-quarter financial performance.

The company generated record revenue of $13.4 billion, representing a 45% increase compared with the same period last year. Its data centre division recorded $8.5 billion in revenue, almost doubling year over year as demand for AI accelerators and server processors increased.

AMD also forecast fourth-quarter revenue of approximately $17 billion, plus or minus 3%, reflecting continued demand across its data centre business.

The company expects growth to accelerate further in 2027 as it expands production and delivers more AI computing systems to major customers.

Competition With Nvidia Intensifies

AMD's agreements with OpenAI and Meta represent an important step in its effort to challenge Nvidia's dominance in the AI semiconductor market.

Technology companies are increasingly seeking alternative suppliers to diversify their computing infrastructure and reduce dependence on a single chip manufacturer.

However, Nvidia continues to hold a strong position through its established GPU ecosystem, software capabilities and extensive customer relationships.

The growing use of equity-linked agreements also reflects a broader trend in the AI industry, where chipmakers and infrastructure providers are offering financial incentives to secure large, long-term customer commitments.

For AMD, the challenge will be to convert these agreements into sustained revenue growth while managing shareholder dilution and maintaining profitability as competition in the AI hardware market intensifies.

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