Advanced Micro Devices (AMD) is in the spotlight after details emerged about its warrant agreements with OpenAI and Meta Platforms. Each deal is tied to purchases of up to 6 gigawatts of AI chips. Each company has the right to buy up to 160 million AMD shares at $0.01 per share, raising investor concerns about potential dilution.
If both warrants are fully exercised, OpenAI and Meta could collectively own about 16% of an enlarged AMD. That would dilute existing shareholders’ stakes.
Last week, AMD announced it would acquire AI research firm World Labs in an all-stock deal. The deal is valued at $8.2 billion and would also increase AMD’s share count.
The AI chip agreements could generate more than $120 billion in revenue. The market is weighing that potential against the considerable dilution.