Advanced Micro Devices (AMD) experienced a substantial jump in its stock value on Tuesday following the announcement of a major artificial intelligence (AI) chip agreement with Meta Platforms. This collaboration is set to provide Meta with AMD Instinct GPUs to bolster its AI capabilities, marking a significant strategic move for both tech giants.
The financial particulars of this monumental deal remain confidential, yet sources close to the matter, including The Wall Street Journal, estimate its worth could exceed an impressive $100 billion. The initial rollout of shipments, supporting the deployment of the first gigawatt, is slated to commence in the latter half of 2026, indicating a long-term commitment between the companies.
This alliance represents a critical achievement for AMD, adding to a series of high-profile partnerships secured in recent months. Such developments are crucial for strengthening investor belief in AMD's potential, especially as it seeks to carve out a larger market share against its formidable rival, Nvidia, a recognized leader in the AI chip sector. The agreement also includes a performance-based warrant, granting Meta the potential to acquire up to 10% of AMD's shares, contingent on the achievement of specific milestones related to Instinct GPU shipments. This clause, involving up to 160 million shares out of AMD's current 1.6 billion outstanding, further underscores the depth of the partnership.
Mark Zuckerberg, CEO of Meta, expressed enthusiasm for the long-term collaboration, highlighting its importance for diversifying Meta's computational resources and delivering "personal superintelligence." He anticipates that AMD will be a pivotal partner for Meta for many years to come.
Despite a roughly 8% year-to-date decline in AMD's shares prior to this announcement, reflecting a broader slowdown in certain segments of the AI market, the news propelled AMD's stock up by more than 10% in premarket trading. Conversely, Meta's shares saw a slight dip, while Nvidia, awaiting its highly anticipated earnings report, experienced a more than 1% decrease. This deal not only signifies AMD's growing prowess in the AI chip industry but also highlights the increasing demand for advanced AI infrastructure across major technology platforms.
