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AMD's AI data center guarantees reach about $8.5 billion, Benzinga reports

For a credit officer lending to data-center developers

AMD has guarantees on customers' data-center leases and debt totaling approximately $8.5 billion as of September, according to a Benzinga report published Nov. 4 on its Q3 results; AMD's own filing was not among the sources provided.1

Benzinga reported that AMD is helping customers secure data centers where its chips can be installed, potentially generating billions in future sales.1 On Tuesday's earnings call, Bank of America analyst Vivek Arya questioned whether customers had enough financing, land and power for roughly 3 gigawatts of planned AMD deployments in 2027, and CEO Lisa Su said AMD was working closely with customers to prepare infrastructure years in advance.1

Benzinga reported that lease guarantees rose 88%, from $4.1 billion in June to $7.7 billion in September, and that another $750 million in debt guarantees brings the total to approximately $8.5 billion.1

AMD has also signed another $13.3 billion in data-center leases that have not started, Benzinga reported; AMD plans to pass the facilities to partners but could still owe the rent if they cannot pay.1

In a July deal, Core Scientific agreed to provide capacity for 529 megawatts; AMD leased 377 megawatts itself and backed a cloud provider taking the other 152, and received warrants to buy up to 30 million Core Scientific shares at $23.47 each, per Benzinga.1

Benzinga reported that AMD ended September with $15.8 billion in cash and short-term investments, no commercial partner had defaulted, and AMD had made no guarantee payments, though AMD warned it could have to pay "without realizing the anticipated economic benefits."1

Why it matters

For lenders and counterparties, AMD's support and its tenants' ability to pay may depend on the same thing, continued AI demand, so the two should be treated as correlated risks rather than independent ones. Banks financing these sites should also note that AMD, as a chip supplier, benefits when the buildings get built.

From the brief

Our take. AMD now backs $8.5 billion of customer leases and debt, plus $13.3 billion of leases not yet started, against $15.8 billion in cash. If your borrower's tenant credit rests on AMD, so does everyone else's.

Action. Commercial credit: List every data-center loan with AMD or Nvidia lease or debt guarantees and total the exposure by guarantor.

What our records say

Bank of America's AI strategy is to extend one assistant, Erica, step by step into employee tools, treasury products and advisor workflows, funded by a technology budget of $14 billion a year.1

  1. BofA: AI programme summary (part 1)

From our records

Sources

  1. ReportAMD's AI Data Center Guarantees Reach $8.5 Billion as It Challenges Nvidia Yahoo Finance
  2. Primary sourceDocument SEC
  3. Also reported byAMD rides data center riches to ‘largest and most profitable’ quarter in history The Verge