Social media and tech giant Meta Platforms (Nasdaq: META) has reached a multi-billion dollar, multi-year deal to purchase artificial intelligence chips from Advanced Micro Devices (Nasdaq: AMD) to power its data centers.
AMD has been slowly gaining ground in the AI compute market as companies look to reduce their reliance on Nvidia (Nasdaq: NVDA). Surging demand for AI processors has deepened competition for the industry leader and other niche players as the tech sector scrambles to secure scarce supply.
Meta Pens $100 Billion Deal With AMD to Purchase Instinct Series GPUs Over the Next Five Years
Meta said in a press release that it will be buying up to $100 billion worth of AMD’s Instinct GPUs over the next five years to build out “personal intelligence” offerings across its products – Facebook, Instagram, WhatsApp, and Threads.
Meta said the purchase will provide the company with up to 6 gigawatts of data center power demand, starting with AMD’s forthcoming MI450 flagship series GPUs and its latest-generation CPUs in the second half of the year.
For comparison, one gigawatt is enough to power roughly 750,000 homes or 100 million LED bulbs.
AMD has also offered Meta a performance-based warrant for up to 160 million shares of its common stock, representing a 10% stake in the company for $0.01 each, structured to vest over the course of the deal. According to The Wall Street Journal, the full stock award is conditional on the Santa Clara, California-based chipmaker’s share price, which would need to hit $600 for Meta to receive its final tranche. There are also “technical and commercial considerations” for each tranche of the warrant that Meta needs to fulfill.
The two generations of CPUs supplied to Meta will be customized for social media use, promising powerful performance while keeping energy consumption as low as possible. Meta also contributed to the MI450 chip’s design and is optimized for a computing process known as inference, which is when a large language model (LLM) responds to user queries. It will compete with Nvidia’s next-generation Vera Rubin AI supercomputer architecture.
Meta CEO Mark Zuckerberg said the firm’s strategic partnership with AMD is an important step, as it helps diversify its compute and work towards personal superintelligence. He noted that these AI systems are designed to deeply understand and empower individuals in their everyday lives.
Meta to Invest up to $600 Billion in Data Centers and AI Infrastructure Across the U.S.
The company has pledged to invest at least $600 billion into data centers and AI infrastructure across the United States over the next several years, including a projected capital expenditure of $135 billion in 2026. Meta recently unveiled plans for a $10 billion gas-powered data center campus in Indiana with 1 gigawatt of compute capacity.
Apart from AMD, Meta also struck a multi-year deal with Nvidia to expand its data centers with millions of Grace and Vera CPUs and Blackwell and Rubin GPUs. While the social media behemoth has long been using Nvidia’s hardware for its AI products, this deal represents the first large-scale deployment of the Grace series.
NVIDIA says it will deliver significant performance-per-watt improvements in Meta’s data centers, with plans to add its next-generation Vera CPUs to the facility next year. Meta is also working on its own in-house chips to run AI models, but has reportedly run into technical challenges and rollout delays with the strategy.
Similar to the Meta deal, last October, AMD partnered with OpenAI to deploy 6 gigawatts of GPUs to power the AI firm’s next-generation infrastructure, with the initial 1 gigawatt deployment of AMD Instinct MI450 series GPUs starting in the second half of this year.
Under the agreement, OpenAI will work with AMD as a “core strategic compute partner” to drive large-scale deployments of AMD’s technology, starting with the MI450 series and rack-scale AI solutions that will extend to future generations of the product. AMD also issued a warrant for up to 160 million shares of its common stock, structured to vest as the chip purchases scale up to 6 gigawatts.
Meta Platforms Inc. (META) closed Tuesday’s session at $639.30 – up 0.32% for the day. Advanced Micro Devices Inc. (AMD) closed the previous trading session at $213/84 – up 8.77% on the day.
