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OpenAI's multi-billion-dollar deal with AMD includes a warrant structure that pays OpenAI if AMD meets certain milestones.
AMD announced a deal on Monday to supply 6 gigawatts of Instinct GPUs to OpenAI across multiple hardware generations, issuing warrants for 160 million AMD shares that vest only when performance and price targets are met.
AMD is offering OpenAI equity rather than collecting billions in cash upfront. The warrants pay off only if AMD delivers chips that make OpenAI successful, thereby aligning the incentives of both companies.
Will the first 1-gigawatt MI450 chip rollout hit its second-half 2026 deadline, and will AMD's stock reach the $600 trigger that maximizes warrant value for OpenAI?
Reciepts
• [Report] CNBC coverage of AMD-OpenAI deal, 6 Oct 2025 — Details on stock surge and warrant structure tied to milestone achievements
• [Report] AMD official press release, 6 Oct 2025 — Confirms 6-gigawatt total deployment starting with MI450 series in H2 2026
• [Analysis] Fortune on Nvidia competition, 6 Oct 2025 — Counter-perspective arguing Nvidia's ecosystem advantages and recent $100B OpenAI deal make AMD's challenge significant despite warrant alignment
Counter-read: options aren’t cash. The upside only materializes if AMD ships on schedule, yields hold, software stacks mature, and OpenAI delivers the promised capacity. Miss those, and the equity sweetener is just a press-release cameo. Advanced Micro Devices, Inc.
AMD's stock jumped 24% on the news. Wall Street loves a deal where getting paid requires actually delivering value. Novel concept.
Here’s The Brew
Warrant structures address the trust issue when billion-dollar bets require alignment.
Within hours of Monday's announcement, AMD's market cap surged by $63 billion as investors priced in the deal structure.
AMD receives equity payments only if its chips work at scale for OpenAI's models. OpenAI gains potential 10% ownership in a chipmaker whose financial future depends on OpenAI's success.
AMD secures a major customer whose compute needs are growing exponentially.
The warrant ties their outcomes together.
Both parties profit when AMD delivers functional chips that enable OpenAI's growth.
The structure eliminates the need for extensive enforcement mechanisms by aligning financial incentives.
Two Sides, One Mug
Image: Getty Images
Pro: Warrant structures align suppliers and customers, reducing conflicts and ensuring AMD prioritizes OpenAI's needs when resources are scarce.
Con: AMD is betting company equity that their chips will compete with Nvidia's established ecosystem. OpenAI gains substantial ownership while AMD remains unproven. If AMD can't execute, the dilution hurts shareholders.
Our read: Both sides have substantial stakes at risk. OpenAI depends on an unproven Nvidia competitor. AMD faces dilution if it can't deliver. The mutual exposure creates alignment.
Receipt of the Day
Why it shifts the read: The warrant vesting requires both deployment milestones and stock price targets reaching $600 (the stock closed Friday at $164.67). AMD must ship chips good enough to convince the market that AMD deserves a 3.6x valuation increase.
Spit Take
"160M shares at $0.01. Unlocks at $600." — AMD warrant structure, 2025
Coffee Break Links ×3
[Report] TechCrunch: AMD 6-gigawatt GPU deployment details — Comprehensive breakdown of multi-generation hardware rollout and how it compares to OpenAI's $100B Nvidia deal signed in September. The timing is the story.
[Analysis] Reuters: OpenAI's dual-supplier strategy — Why signing both Nvidia (10GW) and AMD (6GW) deals within weeks signals OpenAI treating chip supply as an existential risk worth paying double to hedge.
[Report] Bloomberg: AMD market value surge — Details on $63.4 billion market cap increase, making AMD worth more than Coca-Cola. Bold claims require warrant-level confidence.
Join your team of caffeinated skeptics.
One take, one counter, one receipt.
Six minutes.
Mugshot Poll 📊
What's the real reason for the warrant structure?
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