AMD Warrant Charge Hits $1.1B on OpenAI, Meta Deals, Cutting EPS $0.66

AMD booked a non-cash warrant charge of about $1.1 billion in the third quarter to account for warrants it granted customers, which Reuters tied to its chip deals with OpenAI and Meta Platforms, cutting GAAP earnings per share by $0.66 in the quarter ended Sept. 26.

AMD's Nov. 3 earnings release (Form 8-K, Exhibit 99.1) lists a "change in fair value of warrant liability" of $1,097 million, or $0.66 a share, in its GAAP to non-GAAP reconciliation. The company describes it as the quarterly remeasurement of warrants issued to certain customers, driven by changes in AMD's stock price and other valuation assumptions. Reuters, reporting the same day, put the charge at $1.07 billion, or 66 cents a share. This story uses AMD's filed figure.

The warrant line is one of the items in AMD's reconciliation between GAAP and adjusted results. AMD reported GAAP net income of $2.43 billion, or $1.46 a share, against non-GAAP net income of $3.47 billion, or $2.09 a share. Revenue was a record $13.4 billion, up 45% from a year earlier, with Data Center at $8.5 billion, up 97%. GAAP operating income was $2.8 billion.

Why a warrant charge shows up now

Reuters reports that in February AMD agreed to sell up to $60 billion of AI chips to Meta over five years, with warrants that could let Meta buy up to 10% of AMD if certain milestones are met. An earlier agreement gave OpenAI an option to buy up to roughly 10% of the company. The warrants are re-priced every quarter against AMD's own share price, so the charge moves with the stock. Voltgrid News reported earlier on AMD's $1 billion investment in Meta's equity offering. AMD shares rose 8% in extended trading after the results, according to Reuters.

For readers tracking capacity, the link between chips and equity is the point. Customers who commit to Instinct GPUs and Helios racks earn the right to buy AMD stock, and the accounting cost arrives before most of the hardware does. AMD says Anthropic, Meta, Microsoft, OpenAI and Oracle Cloud Infrastructure are already running workloads on the first Helios rack-scale systems.

Dilution has not started

Reuters quotes AMD finance chief Jean Hu saying dilution would begin only once vesting and exercise conditions, including shipment requirements, are met. According to Reuters, OpenAI's warrant carries AMD share-price thresholds, while Meta's does not. AMD expects to give more guidance in 2027.

The outlook that came with it

AMD guided fourth-quarter revenue to about $17 billion, plus or minus 3%, a 66% rise at the midpoint from a year earlier; Reuters cites an LSEG analyst average of $16.23 billion. Reuters also reports that CEO Lisa Su expects 2027 revenue to grow more than 80%, against the 77% analysts had modeled, with data center chips making up about 80% of next year's sales. We covered the guidance and the 35% inventory build in our earlier report, which did not include the warrant line.

What is not confirmed yet

AMD has not said in the release how many warrants have vested. Because the liability is remeasured each quarter, the next charge or gain depends on where AMD's stock trades, and the company's 2027 dilution guidance is still to come.