AMD secures a $100 billion order from Meta: a 6-gigawatt GPU deal + 160 million shares wager

Meta has reached a groundbreaking five-year procurement agreement with Advanced Micro Devices (AMD) for artificial intelligence chips and equipment, with a total scale of up to hundreds of billions of dollars. This unprecedented collaboration marks an escalation in the investment race among global tech giants in the AI infrastructure sector, while also securing AMD a critical strategic foothold in the computing power market dominated by Nvidia.

According to the latest disclosed agreement, Meta will procure AMD processors and data center equipment with a computing power of up to 6 gigawatts over the next five years. According to Reuters and The Wall Street Journal, the total value of this deal is expected to be between $60 billion and over $100 billion. The first devices equipped with AMD's next-generation MI450 graphics processors (GPUs) are set to begin deployment in the second half of this year.

As part of the innovative financial arrangement of the deal, Meta will receive warrants to purchase up to 160 million shares of AMD stock at a price of $0.01 per share. If both parties achieve specific technical and commercial milestones, and AMD's stock price reaches the target of $600 in the future, Meta could ultimately acquire about 10% of AMD's shares, becoming one of its core shareholders.

This news quickly sparked a strong market reaction. AMD's stock price soared by 15% in pre-market trading in New York, after closing at $196.60 on Monday; Meta's stock price also saw a slight increase of 0.6% in pre-market trading. This deal not only directly boosts AMD's revenue prospects but also highlights how large tech companies are reshaping the industry supply chain through deeply bundled equity cooperation models to secure AI computing power supply.

Deep Customization and Accelerated Computing Power Deployment

The core of this collaboration lies in highly customized hardware solutions. AMD will provide Meta with multiple generations of products, including customized central processing units (CPUs), specifically optimized for Meta's low power consumption and high performance needs.

According to Bloomberg, AMD CEO Lisa Su stated that the company is providing "high-performance, energy-efficient infrastructure" optimized for Meta's workloads, noting that Meta assisted in the design process of the MI450 chip. This chip is deeply optimized for the "inference" phase of AI (the process by which AI models respond to user queries). The Wall Street Journal pointed out that the MI450 uses a "chiplet" architecture design, making it easier to customize than traditional monolithic silicon chips.

"Our ambitions are very high," said Santosh Janardhan, Meta's global infrastructure head, in an interview, adding that the ability to more closely define the required technical specifications was one of the key reasons for Meta's deep collaboration with AMD.

Challenging Nvidia's Market Dominance

This deal holds significant strategic importance for AMD. Currently, Nvidia controls about 90% of the global AI chip market, with a market capitalization of $4.66 trillion, while AMD's market capitalization is approximately $320 billionJust last week, Meta promised to purchase millions of Nvidia processors to drive its AI expansion. However, to diversify supply chain risks and enhance bargaining power, the tech giant is actively seeking reliable "second suppliers." Ben Bajarin, a chip analyst at Creative Strategies, pointed out, "Meta is in a unique position to control the entire technology stack; they can use anyone's computing power. This deal also confirms the current industry reality of limited computing power."

Santosh Janardhan added that given the massive demand for building data centers and infrastructure at Meta, participation from multiple chip suppliers and technology paths is necessary. He emphasized that Meta will continue to procure chips from Nvidia while advancing its internal AI chip development projects.

Equity Bundling and High Capital Expenditures

The transaction structure through which Meta obtained AMD stock warrants has drawn market attention to the financing models in the AI industry. According to Reuters and The Wall Street Journal, last October, OpenAI also reached a remarkably similar agreement with AMD. This model, known as "revolving financing," allows customers to exchange large purchase orders for equity or investment commitments from suppliers, and it is increasingly becoming a conventional means for AI giants to secure key technologies.

This collaboration also reflects the immense capital expenditure pressure faced by tech giants in the AI era. Meta CEO Mark Zuckerberg has previously listed AI as the company's top priority and announced grand plans to build "tens of gigawatts" or even "hundreds of gigawatts" of computing power. According to Meta's financial report released last month, to keep pace with competitors like OpenAI in the fierce global AI race, the company's capital expenditures could reach up to $135 billion this year, with plans to build about 30 data centers in the U.S. and globally.

Lisa Su stated that the partnership between Meta and AMD is moving to the "next level." For AMD, which achieved $34.6 billion in revenue last year, even an additional $10 billion in sales per year would significantly accelerate its pace in catching up with Nvidia in the AI chip market