Meta Platforms (META) and Advanced Micro Devices (AMD) have agreed to a multiyear deal that will see Meta purchase upward of 6 gigawatts’ worth of AI chips as part of its massive AI build-out. The two companies revealed the deal on Tuesday before trading opened, spurring AMD shares higher by over 6%. Meta stock, rather, remained around the $636 price level, and is down 2.8% at the time of writing.
AMD will issue 160 million shares of common stock that will vest in a series of tranches if AMD hits certain milestones, the first of which will hit when AMD ships its first 1 gigawatt of chips. The Meta deal further solidifies AMD’s place as a leader in the semiconductor market and the development of the AI industry. Additionally, the deal is part of what Meta says will be a spending round of over $130 billion in AI expansion.
“We expect this partnership to drive substantial multi-year revenue growth and be accretive to our non-GAAP earnings per share, marking another significant step forward in delivering on our ambitious long-term financial model,” AMD CFO Jean Hu said in a statement. “The performance-based structure also tightly aligns AMD and Meta around execution and long-term value creation.”
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Meta, AMD Stock Performances
Chip stocks like AMD have performed well in the last few years as big tech has continued to invest in the AI wave. While fears of the wave turning into a bubble persist, big tech like Meta continues to put all their eggs in that basket, investing millions into building out AI data centers and improving AI workflow. Meta has been one of the biggest investors among the top tech firms, with Mark Zuckerberg tripling down on AI efforts.
Furthermore, this isn’t Meta’s first big multiyear agreement with a chip giant, not even the first this month. Last week, the Facebook developer announced a separate deal with Nvidia (NVDA). The partnership will see the chipmaker provide Meta with millions of its Blackwell and Rubin GPUs. In addition, Nvidia also said Meta will host the first large-scale deployment of its Grace CPU servers.
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Meta Platforms’ stock is down as of writing, with investors still worried about the increased capital expenditure on AI. The forecast for Meta stock has it reaching over $700 this year. Meanwhile, AMD stock experts project the chip stock to hit $298 and higher this year, a climb of over 40% from current prices.
