AMD recorded a $1.097 billion change in the fair value of warrants it issued to customers in the third quarter of 2026, according to the earnings release it filed with the SEC on 3 November. By our arithmetic, that equals 39% of the quarter’s GAAP operating income of $2.832 billion.
It is the first quarter in which the warrants reached AMD’s results. Its 10-Q for the second quarter lists two such warrants, issued to OpenAI in October 2025 and to Meta in February 2026, and said that as of 27 June “no warrant shares had vested or become exercisable” and the warrants had no impact on its financialstatements.
The release says the change relates to “the quarterly remeasurement of warrants issued to certain customers” and is “driven by changes in AMD’s stock price and other valuation assumptions”. It does not name the customers.
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The key insight: AMD’s customer warrants reached its results for the first time: a $1.097 billion fair-value change, equal to 39% of third-quarter GAAP operating income by our arithmetic, and $0.66 a share, more than the $0.63 gap between GAAP and non-GAAP earnings.
According to the second-quarter 10-Q, each warrant entitles the holder to buy up to 160 million AMD shares at an exercise price of $0.01 per share. They vest in tranches tied to Instinct GPU purchase milestones and to specified stock price targets, and the OpenAI warrant is also subject to stock-performance thresholds.
The same filing says the agreements behind them cover up to 6 gigawatts of AMD data center GPUs for each customer, with the first gigawatt powered by MI450 products. It also says “The warrants will be classified as liabilities until certain conditions for equity classification are met”. A liability is marked to fair value each quarter, which is why the value moves with AMD’s share price.
AMD’s third-quarter 2026 GAAP bridge from operating income to net income, $ million, from its statement of operations (8-K Exhibit 99.1). The reconciliation adds back a $1,097 million change in fair value of customer warrants below operating income; the 39% share is our arithmetic.
What the Charge Did to GAAP Profit
GAAP operating income rose 42% from the second quarter, to $2.832 billion from $1.990 billion. GAAP net income rose 6%, to $2.428 billion from $2.297 billion.
The gap opens below the operating line. Other income (expense), net was an expense of $902 million, against income of $598 million in the second quarter, and pre-tax income fell to $1.868 billion from $2.551 billion. AMD then recorded an income tax benefit of $555 million, against a $252 million provision in the second quarter.
Per share, the warrant change was $0.66. GAAP diluted earnings were $1.46 and non-GAAP earnings $2.09, a gap of $0.63, by our arithmetic; the warrant add-back alone is larger than that gap, and the reconciliation offsets it mainly with a $0.64 income tax adjustment.
No Cash Changed Hands
The cash flow statement adds back $1.179 billion as the “Non-cash impact of warrants issued to customers, net”, in both the third quarter and the first nine months. That is $82 million more than the $1.097 billion fair-value change, by our arithmetic; the release does not explain the difference.
Why the Share Price Matters
AMD’s slides list, among the risks to its outlook, “AMD’s stock price volatility, including the potential impact on the fair value of customer warrants and AMD’s GAAP earnings”. The slides give an average stock price of $511 for the third quarter, and an average of $587 between 28 September and 23 October, which AMD used for its fourth-quarter share count.
AMD gives its fourth-quarter outlook on a non-GAAP basis and lists the change in fair value of the warrant liability among the adjustments to reach GAAP. It also says “Q4’26 share count is not expected to be impacted by customer warrants”.
Update, 3 November, from the earnings call
On the call, about 22:21 UTC, CFO Jean Hu said the $1.1 billion charge was “primarily reflecting the increase in our share price and the changes in the estimated probability of meeting the warrant conditions”, and added: “Going forward, this quarterly non-cash fair value adjustment are expected to increase as we and our customers progress under this agreement.” She said the amounts will vary with AMD’s stock price and do not affect non-GAAP results or free cash flow.
Asked by a UBS analyst about share count, about 22:45 UTC, she said the warrant shares dilute only “once all the vesting conditions and the exercising conditions are met by our customers. That means the shipment needs to be there and some commercial conditions need to be met.” She said AMD will give guidance in 2027 on when it believes those conditions are met, and that it does not expect fourth-quarter share count to be affected. Lisa Su named OpenAI and Meta among the lead customers that brought their first Helios racks online in the quarter; our piece on the Helios ramp is here.
Quotations from our own machine transcript of the call audio; times approximate.
How Each Side Reads These Figures
For readers who see a paper charge, the figures include a $1.179 billion non-cash add-back in the cash flow statement and non-GAAP earnings of $2.09 a share, which exclude the warrant change.
For readers who see a real cost, the figures include a $1.097 billion hit to GAAP pre-tax profit, equal to 39% of operating income, and up to 160 million shares per warrant at $0.01 each. We cite no analysts’ views here.
As we read it, the warrants turn AMD’s own share price into a line in its GAAP results: the release says the change is driven by the stock price, so the better AMD shares do, the larger the liability it marks.
As we read it, this is the accounting cost of the equity AMD attached to its OpenAI and Meta GPU agreements, showing up only now that the release reports a change; the 10-Q had said there was no impact through June.
As we read it, the GAAP-versus-adjusted gap now carries a customer-deal item, not only amortization and stock pay: of the $2.09 non-GAAP figure, $0.66 is the warrant add-back.
AMD Q3 2026 earnings release, footnote to the GAAP to non-GAAP reconciliation
“Change in fair value of warrant liability relating to the quarterly remeasurement of warrants issued to certain customers is driven by changes in AMDโs stock price and other valuation assumptions.”
Three Implications
FOR INVESTORS COMPARING AMD’S EARNINGS FIGURES GAAP diluted earnings were $1.46 a share and non-GAAP $2.09; the warrant change was $0.66 a share, offset in the reconciliation mainly by a $0.64 tax adjustment.
FOR OPENAI, META AND OTHER GPU BUYERS The second-quarter 10-Q ties vesting to Instinct GPU purchase milestones and stock price targets, with up to 160 million shares per warrant at $0.01 each.
FOR READERS OF AMD’S CASH FLOW The cash flow statement adds back $1.179 billion as a non-cash impact of customer warrants; the release does not explain the $82 million gap to the $1.097 billion fair-value change.
The framework puts it this way: “The $1T capex cycle is being underwritten by a $1T concentrated demand commitment from two counterparties whose combined free cash flow is deeply negative.”
As we read it, one of the two warrant holders in AMD’s 10-Q, OpenAI, is one of the two counterparties the framework names, and AMD has paid part of the price of that demand in its own equity. The framework was published in May 2026 and does not discuss AMD’s warrants.
This piece is based on AMD’s third-quarter 2026 earnings release and slides, filed as Exhibits 99.1 and 99.2 to its 8-K of 3 November 2026, and its 10-Q for the second quarter. The 39% share, the per-share gap and the $82 million difference are our arithmetic.
The release does not say which customers or tranches the change relates to, whether any tranche vested in the quarter, or which income-statement line carries it. The 10-Q for the third quarter, which may explain these points, had not been filed when we read the release, so its risk factors are not covered. We had not heard the earnings call, scheduled for 22:00 UTC. We did not contact AMD.
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AMD’s customer warrants reached its results for the first time in the third quarter: a $1.097 billion fair-value change, equal to 39% of GAAP operating income by our arithmetic, which helped turn a 42% rise in operating income into a 6% rise in net income. The release says the change is driven by AMD’s share price; it involved no cash.
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A note on sourcing. Every company figure comes from AMD’s third-quarter 2026 earnings release and slides, filed with the SEC as exhibits to its 8-K of 3 November 2026, and its 10-Q for the quarter ended 27 June 2026, read on EDGAR on 3 November. The 39% share, the per-share gap and the $82 million difference are our arithmetic. We did not contact AMD.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
