AMD reported record Data Center revenue of $8.5 billion, up 97% year over year, and forecast roughly $17 billion in fourth-quarter revenue; overall revenue climbed 45%.

With data-center sales rising, AMD forecast more than 80% revenue growth in 2027 based on its current visibility, and its shares gained 8% in extended trading.

Alongside that growth outlook, AMD recorded a $1.07 billion non-cash charge, or 66 cents per share, in the quarter ended September 26, tied to warrants offered to OpenAI and Meta as chip shipments under their agreements ramp up.

The warrants are intended to strengthen major customer relationships, but could dilute existing shareholders if performance and other contractual conditions are met; as many as 320 million new shares could be issued against about 1.64 billion currently outstanding, though none were exercisable by September 26, 2026.

AMD finance chief Jean Hu said dilution begins only after commercial and other conditions are satisfied, and the company expects to provide more guidance in 2027 on the timing.

Hu said the quarterly warrant charges are non-cash accounting items that do not affect AMD’s non-GAAP results or free cash flow; AMD expects these fair-value adjustments to increase as MI450-series shipments and the agreements progress.

Separately, AMD expects to recognize $4.5 billion in remaining grant-date warrant value as a reduction in revenue, allocated in proportion to qualifying sales to OpenAI and Meta.

Preparing for demand has also weighed on AMD’s finances: inventory rose about $3 billion from the prior quarter to roughly $11.5 billion, free cash flow fell from $1.56 billion to about $554 million, and debt principal reached $7.1 billion after an August bond sale.

Analysts saw the agreements as a vote of confidence in AMD’s chips and software, while cautioning that they are unlikely to unseat Nvidia’s dominance; incentives helped secure sales, alongside demand for a credible alternative and AMD’s improving price-performance.

The key execution challenge is converting purchase commitments into shipped chips quickly enough for revenue to outpace warrant-related costs and any dilution if milestones are met.

Ultimately, the strategy’s value will depend on whether revenue and profits from the deals justify the accounting costs and potential shareholder dilution.

AMD’s arrangements fit a broader trend of AI suppliers using equity incentives to lock in infrastructure demand; comparable deals include Cerebras with OpenAI, Marvell with Google and Qualcomm with Amazon.