The announcement sent AMD shares up more than 6% in early trading, while rival Nvidia slipped about 1% ahead of its earnings report. The agreement underscores intensifying competition in the AI semiconductor market, where tech giants are racing to secure access to high-performance processors amid supply constraints.
Supply Lock-In and Strategic Diversification
Under the agreement, AMD will provide Meta with six gigawatts’ worth of AI chips, beginning with one gigawatt of its upcoming MI450 flagship processors in the second half of the year. AMD Chief Executive Lisa Su said the MI450 chips are optimized for inference workloads — the process by which AI systems such as chatbots generate responses to user queries.
One gigawatt of computing capacity is roughly equivalent to the energy needed to power about 750,000 homes.
Meta also plans to purchase central processing units (CPUs) from AMD, including customized variants tailored to the company’s infrastructure needs. According to Su, the chips will be engineered to balance high performance with energy efficiency and will include two generations of AMD CPUs.
The deal allows Meta to acquire shares through warrants covering 160 million AMD shares at an exercise price of one cent, vesting over time as AMD’s stock reaches performance milestones of up to $600 per share. The agreement also includes technical and commercial benchmarks that must be met.
Deepening Industry Ties
The partnership highlights increasingly close financial ties between AI hardware suppliers and their largest customers. Meta and OpenAI are set to hold stakes in key chip suppliers, while Nvidia has explored investments in major clients. Analysts have described such arrangements as a resurgence of “circular deals,” where suppliers and customers become financially intertwined.
“Meta is locking in supply, diversifying away from a single vendor, and doing whatever it takes to make sure its AI ambitions aren't bottlenecked by chips,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
At the same time, some analysts caution that granting a potential 10% stake could signal AMD’s need to stimulate long-term demand amid fierce competition.
AI Spending Surge
The agreement comes as major technology companies ramp up capital expenditures to expand AI infrastructure. Combined spending by Meta, Alphabet Inc., Microsoft, and Amazon is projected to reach at least $630 billion this year, much of it directed toward data centers and AI hardware.
Meta has already secured chips from Nvidia and is continuing to develop in-house processors. The company is also reportedly in discussions with Google regarding the use of its tensor processing units.
Santosh Janardhan, Meta’s infrastructure chief, said the scale of the company’s AI expansion requires multiple suppliers. “All of the chip makers end up having sort of a seat at the table,” he said.
Industry observers expect the market for inference-focused hardware to outgrow that for AI model training equipment, positioning AMD’s MI450 processors as a direct competitor to Nvidia’s forthcoming Vera Rubin platform.
With the deal, Meta deepens its investment in securing long-term AI capacity, while AMD gains a major vote of confidence in its next-generation hardware as the battle for AI dominance intensifies.