AMD just booked a $1.07 billion1 cost for winning two customers. No cash left the company. No shares changed hands. The bill still hit the income statement.
AMD reported the noncash charge on November 3, 20261, for the quarter ended September 26. It equals 66 cents per diluted share2, according to AMD. It comes from warrants attached to its chip deals with OpenAI and Meta. A warrant is a right to buy stock at a fixed price, and these carry a price of one cent per share.
Each customer holds warrants for up to 160 million3 AMD shares that vest only upon milestones, according to AMD's filings. IBTimes reports that exercising all 320 million2 would cost the pair about $3.2 million. It also reports AMD closed near $484 on results day1, which puts those shares at roughly $155 billion.
Nobody outside these deals knows how much will vest. AMD said no warrant shares had vested as of September 26, so much of that value may never move. The pattern is already clear. Two anchor buyers got equity sweeteners, and a supply contract started behaving like a financing deal.
Penny warrants turn chip sales into financing
The penny-warrant rebate pays a buyer in the seller's own stock. AMD's version releases shares in tranches, meaning batches that unlock one at a time. According to AMD's filings, each batch is tied to milestones that start with delivery of 1 gigawatt and climb toward 6 gigawatts of purchases, plus stock-price conditions.
| Q3 fair-value chargeAMD · noncash, other income and expense | $1.07B1 |
|---|---|
| Future revenue reductionAMD · remaining grant-date warrant value | $4.5B2 |
| Warrant cap per customerAMD filings · vests on milestones | 160M3 |
| Meta warrant valueIBTimes close · 160M shares at $484 | $77.4B |
The cost of that rebate lands in separate places on the books. Sort them out and the $1.07 billion4 stays in proportion.
Fair-value marks come first. Fair value is the estimated market price of the warrants today, and AMD has to update it every quarter. AMD said the third-quarter mark rose mainly because its share price climbed and its estimates of milestone odds changed. It booked the result in other income and expense.
Revenue reductions come second. AMD disclosed about $4.5 billion2 of remaining grant-date warrant value, which it expects to subtract from revenue as qualifying chips ship to the two customers. That sum is about a third of AMD's $13.4 billion1 in third-quarter revenue.
Dilution comes third. Reuters reports each customer could end up owning roughly 10%5 of AMD if its warrants fully vest. AMD says the quarterly marks will leave non-GAAP results and free cash flow untouched. True for cash. Existing shareholders still fund the dilution.
Meta's $60 billion deal, priced in shares
The before-and-after fits on one line. IBTimes reports AMD booked no comparable warrant charge in the second quarter of 2026. In the third quarter, the line read $1.07 billion1. AMD's GAAP net income for that quarter was $2.4 billion, so the charge equaled about 45% of the profit left over.
Priced the way a seller in AMD's seat would price it, the Meta deal starts with cash. Reuters reports Meta agreed to buy up to $60 billion5 of AMD chips over five years. That ceiling averages $12 billion a year. IBTimes reports the deal covers up to 6 gigawatts, which works out to about $10 billion of chips per gigawatt.
The equity side is bigger. Meta's warrant covers up to 160 million1 shares, according to AMD's filings. At the roughly $484 close IBTimes reported, that stake is worth about $77.4 billion. The equity outweighs the full chip ceiling by about $17.4 billion.
Think of the purchase order as the salesperson and the warrant as the commission check, drawn on your shareholders' account. AMD reported a 54%3 GAAP gross margin for the quarter. Apply that to the full $60 billion5 and Meta's purchases would yield about $32.4 billion of gross profit. That's under half the warrant's value at the $484 price1.
That margin is company-wide and applied here to one contract, so treat it as a rough marker. The share-price thresholds also mean some tranches may stay locked at $4841. You are reading a ceiling. The real number depends on which batches unlock.
Two numbers in the press coverage can be ignored. The first is the $3.2 million2 exercise price that IBTimes reports. It tells you what the buyers pay, but the cost to AMD owners sits in share value. The second is AMD's non-GAAP EPS of $2.093, which strips the warrant mark out by design.
Watch three numbers each quarter: GAAP diluted EPS, which AMD put at $1.461, the remaining $4.5 billion2 revenue reduction, and the diluted share count. Those move when the warrants cost real money. Everything else is commentary. If the share count starts climbing, the rebate is getting paid.
The deal might still be cheap for AMD. It is unclear whether AMD would have won either buyer without the warrants. Reuters also reports AMD shares rose 8%5 in extended trading after it forecast faster-than-expected 2027 growth.
We think the warrant is the real price tag on these deals. A vendor who books $60 billion5 of headline revenue and skips a $77.4 billion equity line is reading half the invoice.
Will every anchor deal carry warrants by 2031?
The timeline is short. IBTimes reports AMD signed OpenAI in October 2025 and Meta in February 2026, four months apart. The first charge landed in November 2026.
Meta's five-year purchase window runs to about 2031, so that's the horizon for the full bill. Its reporting frames the AI boom as circular, with the same companies sitting on both sides of the money. Two deals in four months make a precedent.
The math compounds fast. Using Reuters' figures, two anchors at roughly 10%5 each put about 20% of AMD on the table. A third anchor on the same terms would push that toward 30%, before dilution shrinks each slice. Every new buyer now has a template to point at.
The asymmetry favors the buyers. Reuters quotes analysts saying Nvidia still sells every AI chip it can make, so Nvidia has no reason to pay in stock. Equity looks like the challenger's tool, a way to counterposition against a leader with a sold-out order book. If AMD's stock falls, the warrants lose value and the marks can swing back; if it climbs, Meta and OpenAI collect more of the win.
Our call could change with the 2027 guidance. If tranches vest mostly on purchase volume, the warrants work like a volume rebate tied to real chips. If share-price thresholds dominate, the buyers are holding a cheap bet on AMD stock. Either way, the next vendor chasing a 6-gigawatt customer should expect to be asked for equity.
Model the equity line before you sign
If you sell hardware, cloud capacity or any big-ticket infrastructure, you can build this one-sheet model in an hour and rerun it every quarter. Use the Meta deal as your test case, since every input is public.
Step one: put contract cash in row one. For the Meta test, enter $12 billion a year for five years, the average of Reuters' $60 billion5 ceiling.
Step two: put gross margin in row two. AMD's reported 54%3 gives about $32.4 billion over the full term. Swap in your own margin once the formula works.
Step three: build the equity row. Multiply warrant shares by today's share price, then by double today's price. With Meta's 160 million1 shares and the $484 close IBTimes reported, that gives about $77.4 billion and $154.9 billion.
Step four: weight each tranche by the odds it vests. Your first guesses will be wrong, and that is normal. AMD's own charge came partly from revised milestone estimates, so plan to change these cells.
Step five: compare the weighted equity number with the gross-profit row. If equity beats gross profit, test other structures before you sign. A capacity reservation pays you for holding scarce supply. A performance rebate ties money to measured system results, and both are easier to value.
Step six: rerun the sheet every quarter and after any big move in your share price. AMD's third-quarter mark rose with its stock, so your number will move with yours. The sheet will break the first time a buyer adds a clause you did not model. Add a row and run it again.
Send the result to your finance lead with one line on top: deal value after equity at today's price. For the Meta test at $4841, that line shows $32.4 billion of gross profit against $77.4 billion of equity.
Practise it step by step: Use AI With Numbers, Carefully
The bottom line
The warrant is the real price tag on anchor AI deals.
AMD showed that a supply contract with a giant buyer can arrive with an equity bill attached. Cash flow stays clean while shareholders absorb the dilution and the income statement absorbs the marks. Two deals in four months have set a template that the next 6-gigawatt customer will cite. Vendors who model the equity row before signing will know what their biggest wins actually cost.