AMD Surges 14% on AI Mega-Deal with Meta Platforms
Date: February 24, 2026
Overview of the Deal
Meta Platforms has announced a significant five-year program to purchase AI infrastructure from Advanced Micro Devices Inc. (AMD), totaling 6 gigawatts. This deal, set to commence in the second half of 2026, is one of the largest in the current capital expenditure cycle and positions AMD as a key player alongside Nvidia in the AI chip market.
Financial Implications
Meta has committed to spending over $100 billion on AI compute from AMD, which could potentially lead to Meta acquiring a 10% stake in AMD. This agreement is expected to significantly boost AMD's revenues and enhance its credibility in the AI accelerator segment. AMD's CEO, Lisa Su, indicated that the total value of the deal could reach "double-digit billions" per gigawatt, suggesting a substantial financial impact over the contract's duration.
Strategic Partnership
The structure of the deal includes custom AI chips and equity warrants linked to AMD's future share price performance. Meta will receive warrants to purchase 160 million AMD shares, which will vest based on project milestones and share-price conditions. This arrangement indicates a long-term strategic partnership between the two companies, with Meta gaining influence over AMD's future chip designs.
Market Reaction
Following the announcement, AMD shares surged over 14% in pre-market trading, reflecting investor optimism regarding the expected increase in AI-related revenues. In contrast, Meta's shares rose only modestly, indicating that investors view the deal as a continuation of its existing compute-scale strategy rather than a significant risk increase.
Meta's AI Strategy
Meta's decision to partner with AMD aligns with its broader AI strategy, which includes expanding data-center capacity and diversifying suppliers. The company plans to continue developing its own AI chips while also purchasing from Nvidia and now AMD, highlighting a strategic approach to managing supply-chain risks.
Conclusion
This partnership not only represents a substantial financial commitment from Meta but also marks a pivotal moment for AMD as it seeks to solidify its position in the competitive AI market. The deal is expected to drive significant growth for AMD, potentially altering its trajectory in the accelerator market and contributing to a multi-year investment supercycle in AI infrastructure.