AMD strikes blockbuster $100B AI chip deal with Mark Zuckerbergs Meta

Advanced Micro Devices said Tuesday it has agreed to sell up to $60 billion worth of artificial intelligence chips to Meta Platforms over five years in a deal that allows the Facebook owner to purchase as much as 10% of the chip firm.The agreement could potentially be worth more than $100 billion.AMD shares closed up nearly 9% at $213.84, while market leader Nvidia, set to report results on Wednesday, were little changed.Surging demand for AI processors has deepened competition for Nvidia and niche players as the industry scrambles to secure scarce supply.

In October, Alphabet agreed to supply Anthropic with custom chips it had long reserved for in-house use in a deal worth tens of billions of dollars.AMD had signed a similar pact with OpenAI last year, which was hailed as a vote of confidence in its chips and software, significantly boosting its stock price, while Meta has separately struck a deal with Nvidia to buy millions of AI chips.“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.“For AMD, this is a vote of confidence in its next-generation AI hardware – but having to give up a 10% stake suggests it could be struggling to generate organic demand.”The partnership also highlights the deepening ties among some of the AI industry’s top players amid rising concerns around circular deals.Meta and OpenAI are set to own a stake in one of their most significant suppliers while Nvidia is eyeing investments in some of its largest customers, including the ChatGPT parent.AMD will supply six gigawatts’ worth of chips to Meta, starting with one gigawatt of the company’s forthcoming MI450 flagship hardware in the second half of this year, AMD CEO Lisa Su told a news briefing.One gigawatt is enough to power roughly about 750,000 homes on average.Investor worries about th...