Meta just inked a chip-buying deal so big it could end up owning a chunk of its supplier. The social media giant agreed to purchase enough of Advanced Micro Devices' new MI450 AI chips to juice up data centers using up to 6 gigawatts of computing capacity over five years, a package that's said to top $100 billion in value, reports the Wall Street Journal. In return, AMD will grant Meta warrants to buy up to 160 million AMD shares—around 10% of the company—for a penny each, contingent on performance and stock price milestones, including AMD eventually hitting $600 a share. AMD stock jumped about 7% at Tuesday's open after the announcement.
The deal is a major boost for AMD as it tries to chip away at Nvidia's dominance in AI hardware and lock in a top-tier customer for the long haul. It follows a similar AMD arrangement with OpenAI that critics label "circular financing," where money flows in a loop between partners. The New York Times notes that such deals have led to investor unease on whether the AI surge is really just a bubble that will eventually burst.
The AMD-Nvidia rivalry has ramped up since the surge in AI, which the AP calls "the biggest tectonic shift in technology since Apple co-founder Steve Jobs unveiled the first iPhone." Meta, which is also spending tens of billions of dollars on Nvidia GPUs, is racing to massively expand its AI infrastructure: CEO Mark Zuckerberg has said the company aims for "tens of gigawatts" of computing power from data centers this decade, per the Journal. The partnership also marks one of AMD's first big wins in custom AI chips tailored for a single buyer's workloads.
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