AMD Shares Rise 8% on Over $100B AI Chip Deal with Meta

Shares of Advanced Micro Devices Inc. climbed 8% today following the announcement of a multi-billion dollar chip supply agreement with Meta Platforms Inc.

Under the deal terms, Meta, Facebook's parent company, secures an option to acquire up to 10% of AMD's equity. This includes a warrant for 160 million shares at $0.01 per share, vesting only upon achieving specific collaborative performance milestones.

Meta intends to procure custom versions of the upcoming MI450 graphics cards. Revealed last year, these accelerators utilize TSMC's 2nm process, featuring 432GB of high-speed HBM4 memory capable of 19.6 Tb/s data transfer rates between logic circuits.

The chips will be deployed in racks based on the new Helios design. Co-developed by both firms, this architecture features liquid cooling and a dual-wide layout for easier maintenance, supporting up to 72 MI450 accelerators per rack.

The partnership also includes the adoption of two upcoming CPUs codenamed Venice and Verano. Venice, launching first on TSMC's 2nm node, incorporates optimizations for specific workloads to enhance energy efficiency.

Chip deliveries to Meta are scheduled to begin in the second half of this year. The initial tranche of stock warrants will vest after the social media giant receives 1 gigawatt of chips, equivalent to the power consumption of hundreds of thousands of homes.

Long-term, Meta plans to purchase up to 6 gigawatts of hardware from AMD. If all orders are fulfilled and the chipmaker's stock exceeds $600, the final batch of shares will vest. The Wall Street Journalreportsthe total deal value could surpass $100 billion.

"We anticipate this partnership will drive significant multi-year revenue growth and be accretive to our non-GAAP earnings per share, marking a key step in achieving our ambitious long-term financial model," stated AMD CFO Jean Hu.

This agreement comes four months after the chipmaker signed a similar contract with OpenAI Group PBC. Like Meta, the ChatGPT developer plans to buy up to 6 gigawatts of AI processors and will receive warrants for 160 million shares. OpenAI's strategy also involves other vendors, notably Nvidia Corp. and custom chips with Broadcom Inc.

Meta continues to collaborate with multiple suppliers for data center construction. Last Tuesday, the companysignedan agreement for millions of Blackwell and Rubin graphics cards from Nvidia. The Facebook parent expects capital expenditures to reach $135 billion this year, a increase of over 70% from 2025.