AMD just pulled off the kind of deal that makes Wall Street sit up and pay attention. On Tuesday, the chipmaker announced it will sell up to $60 billion worth of AI chips to Meta Platforms over the next five years — and Meta gets the option to buy up to 10% of AMD as part of the arrangement.
The numbers here are staggering. AMD will supply six gigawatts worth of chips to Meta, kicking off with one gigawatt of its upcoming MI450 flagship hardware in the second half of 2026. For context, one gigawatt is enough to power roughly 750,000 homes. This is industrial-scale AI infrastructure, not a test run.
AMD shares popped more than 6% on the news while, notably, Nvidia dipped about 1%. The timing is no accident — Nvidia reports earnings on Wednesday, and this deal is a loud signal that the AI chip race is no longer a one-horse show. Meta is diversifying its supply chain aggressively, and AMD is the biggest beneficiary.
But here is the part that should raise your eyebrows: AMD is giving Meta a warrant for 160 million shares at a penny per share. The warrant vests as the deal progresses and AMD stock hits rising price targets up to $600. In other words, AMD had to give away a massive chunk of equity to close this deal. As one analyst put it, that suggests AMD may be “struggling to generate organic demand” — a polite way of saying Nvidia is still eating their lunch on pure performance.
The deal also highlights a trend that is starting to make regulators and investors uncomfortable: circular ownership. Meta is about to own a piece of one of its key suppliers. OpenAI already cut a similar deal with AMD last year. Nvidia is eyeing investments in its own customers. Everyone is financially intertwined with everyone else, and if the AI spending cycle ever slows, these entanglements could get messy fast.
Meta, for its part, is not putting all its chips in one basket (pun intended). CEO Mark Zuckerberg is buying from Nvidia, developing in-house processors, and reportedly in talks with Google about using its tensor chips too. As Meta infrastructure head Santosh Janardhan said, “All of the chip makers end up having sort of a seat at the table.”
For traders, the takeaway is clear: AMD just secured its AI revenue pipeline for the next half decade. But the price it paid — literally giving away equity to land the business — tells you everything about where the competitive power still sits in this market. Watch Nvidia earnings Wednesday for the next chapter.