$60 Billion. AMD and Meta Deeply Linked, Challenging Nvidia AI Chip Hegemony

TradingKey - On February 24, Meta ( META) and AMD ( AMD) announced a major five-year artificial intelligence chip and equipment procurement agreement with a total scale of up to $100 billion. This unprecedented collaboration not only further intensifies the investment competition among global tech giants in the AI infrastructure space but also secures a critical strategic position for AMD in the computing power market dominated by NVIDIA.

The order value of this agreement is as high as $60 billion, and both parties announced a deep partnership to support the development of next-generation AI infrastructure.

Under the agreement, AMD will provide Meta with up to 6 gigawatts of custom Instinct GPUs based on the MI450 architecture, optimized for Meta's workloads. The first 1 gigawatt deployment is scheduled to begin shipping in the second half of 2026.

The most striking aspect of the deal is a performance-based warrant agreement: Meta will have the right to acquire 160 million shares of AMD stock (representing approximately 10% of AMD's total outstanding shares). The first tranche of warrants will vest when the first 1 gigawatt of Instinct GPUs is shipped; the remaining portions will take effect in stages as Meta's procurement moves toward 6 gigawatts. Naturally, the exercise conditions are also deeply tied to AMD's stock price performance as well as Meta's own technical and business milestones.

Lisa Su revealed that the design of these warrants provides a win-win scenario for shareholders and solid financial backing for an ambitious plan. She believes that as AMD continues to expand its AI footprint, this deal has become one of the most 'transformational' transactions in the company's history.

In addition, the collaboration will extend to the CPU sector, with Meta planning to deploy a large number of AMD EPYC CPUs and becoming the launch customer for AMD's sixth-generation EPYC CPUs.

By the second half of 2026, AMD is expected to ship custom Instinct GPUs based on the MI450 architecture and sixth-generation EPYC CPUs codenamed 'Venice,' which will run on ROCm software and be built on the Helios rack-scale platform.

Meta CEO Mark Zuckerberg stated in a release: 'We are excited to establish a long-term partnership with AMD to co-deploy efficient inference compute and deliver personal super-intelligence.'

Furthermore, AMD Chair and CEO Lisa Su said she is honored by the strategic partnership with Meta and believes it will help Meta achieve unprecedented breakthroughs in the field of artificial intelligence.

She emphasized that the collaboration covers Instinct GPUs, EPYC CPUs, and rack-mounted AI systems, with the product roadmaps of both companies closely aligned to provide high-performance, high-efficiency optimized infrastructure for Meta's workloads. This will accelerate the world's largest AI deployment and place AMD at the center of global AI development.

Boosted by the news, AMD shares surged more than 8% on Tuesday.

Strategic Significance for AMD

Lisa Su stated that the industry is still in its early stages and the ultimate returns have yet to fully manifest; therefore, forward-looking investments must be made to precisely capture the directions that yield the greatest gains.

In fact, AMD is steadily consolidating its position as the 'second choice.' In October last year, AMD reached a similar agreement with OpenAI, granting OpenAI the right to subscribe to 160 million AMD shares, a deal also linked to deployment scale and stock price.

The partnership announced this time is undoubtedly a key breakthrough for AMD. AMD's initial deliveries will include customized GPUs, a strategy that is markedly different from Meta's collaboration with NVIDIA ( NVDA ).

Moreover, the large-scale delivery of AMD's Helios system means the company will go head-to-head with NVIDIA's Grace Blackwell system for the first time.

In the current AI chip market, AMD still trails significantly behind industry leader NVIDIA, which boasts a market capitalization of $4.66 trillion and holds approximately 90% of the market share, while AMD's valuation is around $320 billion.

AMD's CFO stated that the partnership with Meta is expected to significantly increase the company's revenue over the coming years and improve non-GAAP earnings per share, marking a major step toward achieving long-term financial goals. Additionally, this performance-based collaboration model closely aligns AMD and Meta in terms of execution and long-term value creation.