Is AMD a Buy After Meta Deal?

Shares of Advanced Micro Devices (NASDAQ: AMD) got a lift after the company agreed to a deal with social media giant Meta Platforms (NASDAQ: META). The stock is now about breakeven for 2026, while it's nearly doubled over the past year.

Under the terms of the multi-year deal, Meta has committed to buying 6 gigawatts of AMD's graphics processing units (GPUs) across multiple generations of its chips. The two companies are also expanding their partnership for central processing units (CPUs), with Meta being a lead customer of AMD's 6^th-generation EPYC CPU.

As part of the deal, AMD has also issued warrants to Meta for up to 160 million of its shares. The warrants will vest with each gigawatt of GPU shipments, and are also tied to AMD's stock price. The deal appears to be structured very similarly to the one it struck with OpenAI, also for 6 gigawatts of GPUs, in October.

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Is AMD stock a buy?

Between its deals with OpenAI and now Meta Platforms, AMD has commitments for 12 gigawatts of GPUs over the next several years. Based on Nvidia GPU pricing, each gigawatt of chips is worth about $35 billion. Even if AMD is selling its chips at a discount, this is a massive opportunity. The company generated just under $35 billion in total revenue in 2025, so these deals combined are likely worth more than 10 times its revenue last year.

With both Meta and OpenAI committing to using AMD GPUs, it also opens the door for other large hyperscalers (owners of massive data centers) to do the same. In fact, there were earlier reports that Microsoft had been developing toolkits to translate CUDA code for use with AMD's GPUs to help reduce inference costs. Nvidia's CUDA software moat isn't as wide for inference, so this growing market is a big opportunity for AMD.

Meanwhile, AMD has made it clear that it's willing to give away warrants for its stock in exchange for large deal commitments. This is essentially a deal to buy 5 gigawatts' worth of chips and get 1 free through an investment in the company. It's not dissimilar to wireless carriers giving away free phones to lock in customers.

Given AMD's distant No. 2 market share, it's actually not a bad strategy, as it incentivizes large customers to help make it successful. And I wouldn't think of this just at the GPU level, but on the CPU level, as well, as the CPU market is going to become increasingly important in the age of agentic AI. CPUs are likely to become a big AI growth driver in the coming years, and this is also a way for AMD to help maintain its market share lead in this area.

In light of its growing AI inference and CPU agentic AI opportunities, I'd buy AMD stock even after this jump in price.

Geoffrey Seiler has positions in Meta Platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.