Advanced Micro Devices, Inc. (NASDAQ:AMD) has granted OpenAI and Meta warrants over as many as 160 million shares each, at an exercise price of one cent, with the terms disclosed in the company’s filings.
The stock traded at around $656 on October 6, 198.69% higher over twelve months. Three hundred and twenty million shares for $3.2 million is the kind of number that needs its conditions read before it means anything.
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The Shares Only Arrive If the Chips Do:
A warrant is not a share until it vests, and these vest against deliveries. Each holder earns its tranches by buying AMD processors, up to six gigawatts of deployed capacity apiece. Nothing vests on the signing. So the dilution and the revenue arrive together. AMD only hands over the equity if the customer has already bought the hardware that justifies it.
The final OpenAI tranche carries one more condition: a $600 share price. AMD traded at $655.90 on October 6, so that threshold is already cleared. What this structure does is convert a customer into a shareholder at the pace the customer spends. Revenue grew 50.10% in the most recent quarter, which is the rate this arrangement is designed to extend.
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What 320 Million Shares Would Actually Cost:
Dilution is the right worry, and its size depends on how it is measured. AMD is worth $1.07 trillion. At the current price, 320 million shares represent roughly $210 billion of value handed over for $3.2 million.
Against the market capitalization, that is close to a fifth of the company. The defense is that twelve gigawatts of processors between them is an enormous order, and the equity is the discount attached to it.
Whether that trade is a good one depends on a margin the vesting does not guarantee. Operating margin is 17.25% and net margin 15.58%, both modest for a company priced like this. The balance sheet is not the constraint. Debt of $4.28 billion against $13.11 billion of cash gives debt-to-equity of 6.36%.
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The Valuation Case:
AMD traded at around $656 on October 6 after rising 198.69% over twelve months. Sustainability is the question the warrants themselves ask, because they only pay off for AMD if these two buyers keep deploying at scale.
On price, almost nothing is cheap. The stock trades at 167.32 times trailing earnings and 41.72 times forward. Enterprise value to EBITDA of 106.93 is the figure that stands furthest from the business, since EBITDA of $9.56 billion is small against a trillion-dollar valuation.
A beta of 2.45 means these shares move more than twice as hard as the index. Short interest is only 2.46%, so the market is not positioned against the story.
Conclusion:
The warrants are better structured than the headline number suggests. Nothing vests without deliveries, so the 320 million shares only appear if six gigawatts of processors have been sold to each buyer. The $600 condition on the final tranche is already met at $655.90. However, at full vesting this is close to a fifth of the company for $3.2 million, and the operating margin funding it is 17.25%. At 167.32 times trailing earnings, the price assumes the orders arrive in full. The number to watch is deployed gigawatts, because that single figure decides both the revenue and the dilution.
Market Sentiment:
Advanced Micro Devices, Inc. was held by 164 hedge funds with a combined stake value of about $23.58 billion at the end of Q2 2026 in the Insider Monkey database. This is up from 134 hedge fund holders with a cumulative investment value of around $8.71 billion in the previous quarter.
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This article is originally published at Insider Monkey.
