Meta Seals $60 Billion AI Chip Deal with AMD

AMD has agreed to sell up to $60 billion worth of artificial intelligence chips to Meta Platforms over the next five years, in a landmark supply deal that also gives the Facebook owner the option to acquire as much as a 10% stake in the chipmaker.

AMD shares rose more than 6% in early trading following the announcement, while rival NVIDIA slipped around 1% ahead of its earnings report. The agreement underscores intensifying competition in the AI processor market, where surging demand has heightened concerns over supply constraints.

Under the deal, AMD will supply six gigawatts of AI chips to Meta, beginning with one gigawatt of its forthcoming MI450 flagship hardware in the second half of this year, chief executive Lisa Su said during a briefing. One gigawatt is sufficient to power roughly 750,000 homes on average.

Meta has been racing to secure computing power to support its expanding AI ambitions, including large language models and data centre infrastructure. Analysts say the agreement allows the company to diversify beyond NVIDIA, from which it has already agreed to purchase millions of chips.

“Meta is locking in supply and diversifying away from a single vendor,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown, adding that the equity component suggests AMD may be seeking stronger demand validation for its next-generation AI hardware.

The partnership reflects increasingly intertwined relationships among major AI players. Alphabet Inc., Microsoft, Amazon and Meta are expected to spend at least $630 billion this year on capital expenditure, largely focused on data centres and AI chips, as investors await tangible returns from the sector’s rapid expansion.