Meta's Multi-Billion Dollar Bet: A Strategic Chip Deal Secures Potential 10% Stake in AMD

In a move that sent AMD's stock soaring, Meta has entered a landmark agreement with the chipmaker, a deal structured to potentially grant the social media behemoth a 10% ownership stake. The arrangement, announced Tuesday, ties Meta's massive purchase of specialized processors directly to equity in AMD.

Under the terms, Meta will acquire customized AI chips from AMD with a total capacity of six gigawatts. As part of the transaction, AMD issued Meta a performance-based warrant, allowing it to buy up to 160 million shares for a nominal fee as it fulfills successive chip orders. AMD shares jumped 14% in pre-market trading following the news.

AMD CEO Lisa Su framed the deal as a mutual commitment. "Meta is making a significant bet on AMD, and we are giving Meta an opportunity to benefit if our shareholders do well," Su stated. She noted each gigawatt of computing power in the agreement carries a value in the double-digit billions.

This "shares-for-chips" model echoes a similar pact AMD made with OpenAI last fall and signals a growing trend of major tech customers seeking to diversify their supply chains beyond the dominant market player, Nvidia. Notably, Meta also maintains a separate, multi-year supply agreement with Nvidia itself.

The first allocation of AMD shares to Meta is scheduled for the latter half of this year, coinciding with the initial chip shipments. The warrant's exercise price escalates based on AMD's stock performance, reaching up to $600 per share for the final tranche, and expires in February 2031.