AMD faces massive dilution as stock surge triggers OpenAI and Meta penny-share deals

Advanced Micro Devices has cleared the final stock-price hurdles on deals that could hand OpenAI and Meta up to 320 million shares of the chipmaker for just a penny each.

At AMD's current trading price of around $616, those shares would be worth roughly $197 billion. The prospect has drawn sharp focus to the potential dilution facing ordinary investors, who could see their holdings diluted by about 16% if both tech giants fully exercise their warrants.

The arrangement dates back to October 2025, when AMD agreed to supply OpenAI with up to six gigawatts of data centre power using its Instinct graphics processing units (GPUs). As part of the deal, OpenAI received a warrant to buy up to 160 million AMD shares at $0.01 apiece. Four months later, in February, Meta signed an identical agreement for another six gigawatts, receiving its own 160 million-share warrant.

For the final portion of those shares to vest, AMD's stock had to close above $600. That target seemed distant when the OpenAI deal was signed with AMD trading near $165. However, the chipmaker's stock closed above $600 for the first time on 21 September, and has remained there since.

How the warrants vest

With the stock-price conditions essentially met, the focus shifts to whether AMD can actually deliver the hardware. The warrants vest in tranches tied directly to how much computing power the customers buy. Instead of counting individual chips, the contracts use gigawatts—the amount of electricity a data centre deployment draws—to measure the scale of the order.

According to AMD's latest quarterly filing, no warrant shares had vested as of 27 June. That was expected, as the first shipments to both companies were scheduled to begin in the second half of this year.

The clock is ticking on both agreements. OpenAI’s warrant runs until October 2030, while Meta’s expires in February 2031. To get all 160 million shares, each customer must take delivery of the full six gigawatts.

The threat of shareholder dilution

If OpenAI and Meta hit those milestones, the impact on AMD's share structure will be profound. AMD had approximately 1.63 billion shares outstanding as of late July. Issuing another 320 million shares would expand the total to 1.95 billion, diluting existing shareholders' claim on profits by roughly 16%.

Existing share buyback programmes will do little to cushion the blow. AMD spent just $221 million on buybacks in the first half of this year. Even if it deployed the entire $9.2 billion left on its repurchase authorisation as of June, it could only retire about 15 million shares at current prices. Meanwhile, AMD's pending $8.2 billion all-stock acquisition of AI research startup World Labs is expected to add another 13 million shares to the pile.

A $120 billion payout

Despite the dilution, AMD's leadership insists the trade-off is worth it. Delivering that much hardware will generate massive cash flow. On an earnings call in August, chief executive Lisa Su said the company expects 'double-digit billions' in revenue per gigawatt.

At the lower end of that estimate, delivering 12 gigawatts to OpenAI and Meta would yield at least $120 billion in revenue. To put that in perspective, AMD’s entire data centre division brought in $16.6 billion in all of 2025, though the business is accelerating rapidly, with revenue climbing from $5.4 billion in the final quarter of last year to $6.7 billion in the second quarter of this year.

Chief financial officer Jean Hu has previously stated that the OpenAI deal is expected to be 'highly accretive' to non-GAAP earnings per share, suggesting that the massive influx of profits should easily offset the increased share count. Investors are now left to weigh whether those future gigawatts, which must still be successfully manufactured and shipped over several years, justify a valuation currently trading at around 40 times expected 2027 earnings.