Market UpdatesFeb 27, 20263 Min

Meta, AMD Agree To $60-Billion AI Chip Deal: A Challenge To Nvidia’s Reign?

Advanced Micro Devices (AMD) said on Tuesday, February 24, that it has agreed to supply artificial intelligence (AI) chips worth up to $60 billion to Meta Platforms over the next five years. According to The Guardian, the arrangement involves AMD delivering a total of 6 gigawatts of chips to the parent company of Facebook, beginning with 1 gigawatt of its upcoming MI450 hardware in the second half of this year. The deal positions AMD as a major beneficiary of Meta’s AI infrastructure expansion.

According to reports, the announcement lifted AMD shares by 8.8% to $213.84 on February 24, making it the second-best performer among the benchmark S&P 500 constituents. Meta’s stock, meanwhile, saw a modest increase of 0.3%.

Meta, AMD AI Chip Deal: Key Details

The deal allows the Facebook owner to acquire a 10% stake in the chipmaker, according to a Reuters report. AMD had entered into a similar agreement with OpenAI in 2025, which was viewed as a strong endorsement of its chips and software and helped lift its share price.

Alongside AMD’s flagship graphics processing units (GPUs), Meta intends to buy central processing units (CPUs), including a version tailored specifically to its requirements. The customised CPU will be optimised to deliver high performance while maintaining low energy usage, AMD’s chief executive Lisa Su said, as per the Guardian report. The arrangement will cover two generations of AMD’s CPUs.

Gadjo Sevilla, an analyst at eMarketer in New York, told Reuters that the agreement was “a strong indicator that the AI hardware segment is diversifying and challenging longtime leader Nvidia.” Sevilla added, “AMD has placed itself in a very competitive position to serve the demands of hyperscalers seeking alternatives to Nvidia.”

Why It Matters For Investors

According to analysts, the move highlights growing efforts among leading AI companies to broaden their supplier base beyond Nvidia, the world’s largest chipmaker and AMD’s closest rival. The five-year AI chip deal offers AMD a competitive edge over Nvidia while ensuring uninterrupted hardware supply for Meta in the long run.

As reported by The Guardian, Alvin Nguyen, an analyst at Forrester, said the deal shows a desire among top AI players to diversify chip sourcing, amid reported supply chain constraints at Nvidia.

“For a long time, it looked as if Nvidia was the only chip player in town, but that is increasingly not the case. Meta’s deal with AMD is a blow to Nvidia,” Dan Coatsworth, head of markets at AJ Bell in London, was quoted as saying by Reuters.

Matt Britzman, senior equity analyst at Hargreaves Lansdown in the Great Bristol Area, England, said that the agreement, coming soon after Meta’s Nvidia deal, suggests that Meta is locking in supply, diversifying away from a single vendor. According to Britzman, Meta is doing whatever it takes to make sure its AI ambitions aren't derailed due to possible disruption in the supply of chips.

Gil Luria, head of technology research at DA Davidson in Portland, Oregon, said, “AMD's deal with Meta serves as significant validation for AMD's GPU technology. Meta is committing a significant part of its buildout to AMD and AMD gets a second anchor customer after OpenAI. The main negative impact from the deal is on Broadcom. Since Meta has a separate large deal with Nvidia and will likely continue to rely on Nvidia for most of its GPUs, the supplier getting crowded out appears to be Broadcom.”