Meta strikes AMD chip deal as AI spending continues to rise

Tuesday 24 February 2026 19:16

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Meta has agreed a multi-year deal to buy up to six gigawatts of AI computing power from AMD, in a deal worth more than $100bn (£74.5bn) that could see the social media group take a stake of up to 10 per cent in the US chip giant.

The companies said Tuesday that Meta will purchase AMD’s latest GPUs and latest AI CPUs in large quantities to support a new wave of data centers.

They estimate deliveries will begin later this year, and the first gigawatt capacity will be deployed in the second half of 2026.

AI’s computing capacity of six gigawatts is equivalent to enough electricity to power more than five million homes, demonstrating the sheer scale of Meta’s infrastructure buildout.

In the announcement, AMD granted Meta performance-based warrants to acquire up to 160 million AMD shares, approximately 10 percent of the company, at a nominal price of $0.01 each. The final tranche will be awarded only if AMD shares reach $600.

AMD shares rose about seven percent at the US market open on Tuesday, while Nvidia shares slipped slightly.

Challenging Nvidia’s dominance

The deal is a big win for AMD CEO Lisa Su, as she looks to challenge Nvidia’s grip on the AI ​​chip market.

Nvidia is estimated to control about 90 percent of the market for GPUs used in AI training and inference, and has become the world’s most valuable public company.

It reached a market capitalization of more than $4.6 trillion at the end of last year.

Nvidia has long counted Meta as one of its biggest customers and last week announced a “multigenerational” agreement, in which Mark Zuckerberg’s company will build data centers powered by millions of Nvidia chips.

Meta said it plans to spend up to $135 billion in capital expenditures this year, up from $72 billion last year, as it scales its AI infrastructure.

Zuckerberg said his company aims to deploy “tens of gigawatts” of computing this decade and “hundreds of gigawatts or more over time.”

“This is an important step for Meta as we diversify our computing,” he said in a statement. “I expect AMD to be an important partner in the years to come”

Lisa Su said the agreement puts AMD “at the center of global AI development,” adding that the company provides “high-performance, energy-efficient infrastructure optimized for Meta workloads.”

‘Circular’ structure

The Meta Agreement is one of the first examples of AMD supplying custom AI chips designed for specific customer workloads.

The series uses a modular architecture called a ‘chiplet’, which should make it easy to tailor performance to specific tasks.

The structure of the deal mirrors a similar agreement AMD made with OpenAI in October, which also included warrants for up to 160 million AMD shares tied to purchase volume and share price targets.

These talks have been described by some critics as a form of “circular financing”, in which equity incentives are tied to large investments.

With a limited number of hyperscale customers able to purchase such large quantities of chips, both AMD and Nvidia have used long-term supply agreements and equity incentives to secure demand.

“Meta is in a unique position to control the full stack and they can use whoever’s compute they want,” said Ben Bajarin of Creative Strategies. “The deal will be done comprehensively.”

The announcement comes amid increasing investor scrutiny of the scale of AI spending by Big Tech, but despite concerns about capital intensity, Meta recently attributed record quarterly revenue to AI-driven improvements.

AMD reported fourth-quarter sales growth of 34 percent to $10.27 billion, while Nvidia is expected to report revenue growth of about 68 percent year-on-year when it publishes its results this week.

For AMD, which is valued at about $320 billion, the Meta deal marks a step change in its efforts to become a credible alternative to Nvidia in AI infrastructure.