Key Points
- Meta announced a multi-year deal with AMD to use up to 6 GW of AMD’s graphics processing units in its AI data centers.
- Last week, Meta agreed to use millions of NVIDIA’s processors to support its artificial intelligence growth.
- AMD granted Meta a performance-based warrant to buy 160 million of its shares, about 10% of the company.
Just a week after Meta agreed to use millions of NVIDIA processors for its expansion, the company has signed another major chip deal, this time with Advanced Micro Devices.
On Tuesday, Meta said the multi-year deal with AMD will use up to 6 GW of AMD’s graphics processing units in its AI data centers and will also include AI-optimized CPU cores.
AMD will start shipping MI450 GPUs to its Helios Rack Scale servers later this year.
This is about making the right bets at the right time! AMD CEO Lisa Su told CNBC’s Squawk on the Street on Tuesday.
After the news, AMD’s stock rose 7%. Meta shares dipped slightly, and NVIDIA’s shares stayed about the same.
The deal also gives Meta a performance-based warrant to buy 160 million AMD shares, or about 10% of the company. The first portion becomes available when the first GW of Instinct GPUs are shipped, with additional shares available as Meta buys up to 6 GW.
Vesting also depends on AMD’s stock price reaching certain levels and Meta meeting technical and commercial goals.
Su told CNBC that the warrant structure is a win-win for shareholders and supports a very ambitious plan and financial model. She sees the agreement as one of the most transformational deals for AMD as it grows its AI business.
We are early in the cycle of seeing what the ultimate payoff can be. She said that’s why we have to invest ahead of the curve and focus on what will bring the biggest benefit.
AMD made a similar deal with OpenAI in October, making it a strong second choice for major AI companies and hyperscalers.
That deal also gave OpenAI warrants to purchase 160 million AMD shares with terms tied to deployment and stock price targets.
In its earnings last month, Meta said it could spend up to $135 billion on capital projects this year as it tries to keep up with other big tech companies, OpenAI and Anthropic, in the global AI race. Meta plans to build 30 data centers, with 26 in the US.
Tuesday’s announcement is a critical development for AMD, which is far behind NVIDIA. In the AI chip market, NVIDIA is now the world’s largest publicly traded company, with a US$4.66 trillion valuation and roughly 90% market share, while AMD is valued at $320 billion.
Meta is in a unique position to control the full stack and can choose any computing provider, said chip analyst Ben Bajarin of Creative Strategies. This highlights that we have limited computing resources so that deals will happen across the industry.
Source: Meta strikes AI chip deal with AMD days after committing to deploy millions of Nvidia GPUs
