Performance-based 160 million share warrant worth up to 10% of AMD ties vesting to $600 stock price milestone as Meta diversifies away from Nvidia dominance
Introduction
AMD stock surged as much as 14% in pre-market trading Tuesday, February 24, 2026, before paring gains to close up 8.77% after Meta announced a definitive multiyear agreement to deploy up to 6 gigawatts of AMD GPUs as part of its expanding artificial intelligence infrastructure buildout. The deal — estimated at $60 billion to $100 billion over five years — positions Advanced Micro Devices as a more serious challenger to Nvidia in the hyperscale AI arms race, sending investors scrambling to reassess AMD’s long-term data center trajectory.
As part of the agreement, AMD issued Meta a performance-based warrant for up to 160 million shares of AMD common stock — roughly 10% of the company — at an exercise price of $0.01 per share. The warrant vests in tranches tied to hardware purchase milestones, with the first tranche vesting when AMD ships the initial 1 gigawatt of Instinct GPU capacity. Full vesting requires Meta to purchase 6 gigawatts and AMD’s stock price to hit $600 per share (AMD closed Monday at $196.60). The warrant is exercisable until February 23, 2031.
The announcement comes just one week after Meta expanded its existing deal with Nvidia, signaling a deliberate multi-vendor strategy rather than a wholesale pivot away from Nvidia.
Background and Context
Meta has been aggressively scaling its AI infrastructure to power generative AI models like Llama 4 and Llama 5, recommendation systems, and future metaverse applications. The company is set to spend upwards of $135 billion in capital expenditures throughout 2026 as part of its AI expansion plans, according to Yahoo Finance. That will pay for everything from data center construction and chips to training models.
Until recently, Nvidia dominated that ecosystem. The GPU giant’s CUDA software platform and H100/H200/Blackwell chips have been the default standard for AI training and inference workloads. But Meta — like other hyperscalers including Microsoft, Amazon, and Google — has been increasingly vocal about diversifying chip suppliers to reduce dependency on a single vendor, manage costs, and maintain negotiating leverage as AI compute demand explodes.
Meta plans to invest at least $600 billion in U.S. data centers and AI infrastructure over the next several years, according to TechCrunch. The company recently unveiled plans for a $10 billion gas-powered data center campus in Indiana designed for 1 gigawatt of compute capacity.
The AMD deal centers on the mass deployment of AMD’s next-generation Instinct MI450 accelerators (part of the Helios rack-scale system) and 6th Gen EPYC “Venice” and “Verano” processors. By securing 6 gigawatts of power capacity — roughly equivalent to the energy consumption of six million homes — Meta is doubling down on its “Open Compute” philosophy while diversifying its supply chain away from Nvidia.
Latest Update: Why AMD Stock Is Moving
Here’s why markets reacted so strongly, based on verified reporting from Yahoo Finance, TechCrunch, CNBC, MarketScreener, Investing.com, and other outlets:
1. Scale of the Deal
Six gigawatts represents a significant AI compute deployment. In hyperscaler terms, that signals long-term infrastructure commitment rather than short-term experimentation. The $60 billion to $100 billion estimated value over five years makes this one of the largest chip supply agreements in history.
To put 6 gigawatts in perspective: that’s enough power to supply millions of homes and represents massive data center-scale GPU deployment indicating long-term capital investment. As Yahoo Finance noted: “It’s wild that companies continue to announce these deals in gigawatts. Just tell us how many GPUs you’re selling” — but the gigawatt metric has become the industry standard because it reflects the severe energy constraints currently facing the global data center market.
2. Performance-Based Share Warrant
AMD issued Meta a warrant for up to 160 million shares at $0.01 per share — roughly 10% of AMD’s outstanding stock. The warrant vests in tranches:
- First tranche: Vests when AMD ships the initial 1 gigawatt of chips (shipments scheduled to begin second half of 2026)
- Additional tranches: Vest as Meta’s purchases scale from 1 GW to 6 GW
- Stock price requirement: Full vesting requires AMD’s stock price to hit $600 per share (closed Monday at $196.60)
- Exercise condition: Meta must also achieve key technical and commercial milestones
- Expiration: Warrant is exercisable until February 23, 2031
Meta is permitted to sell the shares once acquired and vested. This structure tightly aligns AMD and Meta around execution and long-term value creation, according to AMD CFO Jean Hu. However, the deal also raises questions about “circular” relationships where tech giants receive equity stakes in their suppliers.
3. Competitive Validation
Landing a hyperscaler the size of Meta validates AMD’s AI GPU roadmap and software ecosystem improvements. Meta has already deployed millions of AMD EPYC CPUs and significant Instinct MI300 and MI350 GPU deployments across its global infrastructure. The expansion to MI450 and the new Helios rack-scale system demonstrates Meta’s confidence in AMD’s ability to deliver at Nvidia-competitive performance and scale.
AMD CEO Lisa Su has called Helios “the best rack scale solution in the world,” taking a direct swipe at Nvidia’s rack systems. The system delivers what AMD claims is superior performance-per-dollar-per-watt compared to Nvidia’s offerings.
4. Diversification Narrative
Investors increasingly believe hyperscalers will avoid single-supplier dependency, creating room for AMD to capture incremental market share from Nvidia. The deal comes just one week after Meta expanded its Nvidia commitment, with Meta securing millions of additional Nvidia CPUs and GPUs. CNBC’s Katie Tarasov noted: “Clearly they’re diversifying their suppliers, ensuring that they aren’t being held to just one vendor when it comes to the GPUs.”
This multi-vendor strategy mirrors Meta’s approach with CPUs, where the company has long used both Intel and AMD EPYC processors across its data center fleet.
5. Revenue Visibility
Large infrastructure contracts improve forward revenue forecasting, particularly in AMD’s data center segment. AMD CFO Jean Hu said in a statement: “We expect this partnership to drive substantial multi-year revenue growth and be accretive to our non-GAAP earnings per share, marking another significant step forward in delivering on our ambitious long-term financial model.”
Rosenblatt reiterated its Buy rating and $300 price target for AMD, highlighting the potential for AMD’s architecture to scale to high-volume production. However, Mizuho expressed reservations about the stock’s recent rally, anticipating that the gains may fade quickly despite the Meta deal. DA Davidson initiated coverage on AMD with a Neutral rating and a $220 price target, noting that while AMD is a strong player in consumer and server CPU markets, it is still catching up in the AI accelerator space.
6. Similar Deal Structure to OpenAI
The Meta deal is structurally similar to one AMD announced with OpenAI in October 2025. As part of that agreement, OpenAI will deploy up to 6 gigawatts of AMD GPUs, with the first gigawatt deployment kicking off in the second half of 2026. AMD issued OpenAI a warrant for up to 160 million shares, with vesting tied to deployment milestones and the chipmaker’s stock price.
AMD also struck a deal with Oracle Corp. in October 2025, with Oracle announcing it will deploy 50,000 AMD AI chips starting in Q3 2026 and continuing through 2027.
Together, these deals position AMD with major commitments from OpenAI, Meta, and Oracle — three of the largest AI infrastructure buyers in the world.
Expert Insights and Market Analysis
Nvidia Still Dominates, But AMD Gains Ground
Analysts note that Nvidia still commands the majority of AI training workloads and maintains leadership in the AI accelerator market. However, AMD’s MI-series accelerators have steadily improved performance-per-watt metrics and total cost of ownership.
The strategic takeaway is not that Nvidia is losing dominance overnight, but that hyperscalers are hedging supply risks while optimizing pricing leverage. AMD is projected to grow its AI accelerator market share from roughly 9% in 2025 to over 15% by the end of 2026, according to market analysts.
Software Ecosystem Maturity
By securing Meta as a “beehive” customer (industry jargon for a large-scale deployment that validates software and hardware integration), AMD has solved its most significant hurdle: large-scale software validation. Meta’s successful migration of its Llama 4 and Llama 5 models to AMD’s ROCm software ecosystem provides a “green light” for other hyperscalers like Microsoft and Alphabet to consider AMD more seriously.
ROCm is AMD’s answer to Nvidia’s CUDA platform. While CUDA remains the industry standard with deeper developer adoption, ROCm has improved significantly in compatibility, performance, and ease of use. Meta’s willingness to migrate production AI workloads to AMD signals that ROCm has reached enterprise-grade maturity.
From a Valuation Perspective
From a valuation perspective, AMD’s AI exposure had been viewed as “optional upside.” This deal moves AI revenue into a more concrete growth driver category. Investors are now watching:
- AMD’s software ecosystem maturity compared to CUDA
- Supply chain capacity to meet hyperscale demand
- Gross margin impact from competitive pricing
AMD stock closed Tuesday up 8.77%. Meta gained 0.32%. AMD is down 8% year-to-date, while Meta is down 3%.
Circular Deal Concerns
The warrant structure raises questions about “circular” relationships where tech giants receive equity stakes in their suppliers. As Yahoo Finance’s Dan Howley noted: “It kind of raises that specter of the circular deal again…as they’re selling these GPUs, then Meta is taking potentially shares of AMD as part of different tranches based on different performance levels.”
This arrangement benefits both companies — AMD secures long-term revenue visibility, and Meta receives potential upside if AMD’s stock appreciates — but it also creates interdependencies that could complicate future negotiations or create conflicts of interest.
Broader Implications
For the AI Chip Market:
The Meta deal reinforces that AI infrastructure demand remains robust despite periodic investor concerns about overspending. Meta is not alone: Meta, Amazon, Google, and Microsoft plan to collectively spend some $650 billion on AI in 2026, according to market estimates.
That’s given some investors pause as they digest whether the investments will bear fruit. Meta has fared the best of the group of big spenders, with shares down just 2.5% since it reported earnings on January 28 and announced its investing plans. Google stock has dropped 8.7% since its own news, while Amazon has fallen 11.9%. Microsoft, however, has been hammered the most since revealing its spending strategy, declining 15.5%.
For Nvidia:
This development signals that hyperscalers are willing to scale multi-vendor strategies, even while maintaining large Nvidia commitments. Nvidia stock closed Tuesday up 0.68%, relatively flat as investors digested the competitive implications.
However, Nvidia is not standing still. The company recently expanded its Meta partnership to include millions of additional CPUs and GPUs, including Nvidia’s Confidential Computing for WhatsApp. Nvidia is also diversifying into CPU markets, which could prove problematic for Intel and AMD, which have dominated the CPU server space for decades.
For Semiconductor Stocks:
Expect continued volatility as capital expenditure cycles from Meta, Microsoft, Amazon, and Google reshape chipmaker revenue projections. AI-related stocks have taken a beating since the start of 2026, with concerns about oversupply, competitive pressure, and tariff impacts weighing on sentiment.
The broader question: Are these massive infrastructure investments sustainable, or will hyperscalers eventually hit diminishing returns on AI capital spending?
Related History
Historically, hyperscalers diversify suppliers once initial market leaders establish pricing power. Similar patterns occurred in:
- Cloud server CPUs: AMD challenged Intel’s dominance starting in 2017 with EPYC processors, gaining market share by offering better performance-per-dollar
- Networking hardware markets: Multiple vendors emerged to compete with Cisco
- Memory and storage supply cycles: Hyperscalers routinely split orders across Samsung, SK Hynix, Micron, and others
The current AI GPU market appears to be entering that diversification phase. The difference is scale: AI infrastructure spending is reaching unprecedented levels, with individual deals measured in tens of billions of dollars.
AMD has reinvented itself over the past decade under CEO Lisa Su, transitioning from near-bankruptcy in 2015 to a $320 billion market cap company competing with Nvidia and Intel across CPUs, GPUs, and AI accelerators.
What Happens Next
Key catalysts to watch:
- AMD earnings guidance revisions: Next earnings call will reveal updated data center revenue forecasts
- Shipment milestones: First 1 GW shipment (second half 2026) will vest Meta’s first warrant tranche
- Additional hyperscaler partnerships: Will Microsoft, Amazon, or Google follow with similar AMD deals?
- Nvidia’s response: Will Nvidia accelerate product launches or adjust pricing to defend market share?
- Stock price performance: AMD needs to reach $600 per share for Meta to receive full warrant vesting (currently $196.60)
If AMD converts this deal into recurring large-scale deployments and hits shipment milestones, it could materially narrow the AI GPU market share gap over the next 24 months. However, execution risk remains high — AMD must deliver on performance promises, ensure software compatibility, and scale manufacturing to meet hyperscale demand.
Conclusion
AMD stock’s rally reflects more than headline excitement. The Meta 6-gigawatt GPU agreement signals that AI infrastructure demand remains massive and that hyperscalers are serious about supplier diversification.
While Nvidia remains the clear market leader — commanding the majority of AI training workloads and maintaining the deepest software ecosystem — AMD has moved from peripheral challenger to strategic alternative in the AI compute ecosystem. The $60 billion to $100 billion deal, combined with similar commitments from OpenAI and Oracle, establishes AMD as a primary pillar of the world’s AI infrastructure.
For investors, the question now shifts from “Can AMD compete?” to “How much share can AMD realistically capture?”
The answer will depend on execution: delivering chips on time, maintaining software compatibility, scaling production, and proving that ROCm can truly compete with CUDA at production scale.
One thing is certain: the AI infrastructure arms race is far from over. And AMD has just secured a seat at the table.
FAQ
Q1: Why is AMD stock rising today? AMD stock jumped as much as 14% in pre-market trading and closed up 8.77% on Tuesday, February 24, 2026, after Meta announced a definitive multiyear agreement to deploy up to 6 gigawatts of AMD GPUs — estimated at $60 billion to $100 billion over five years. AMD also issued Meta a performance-based warrant for up to 160 million shares (roughly 10% of AMD) at $0.01 per share, vesting in tranches tied to shipment milestones and AMD’s stock price reaching $600.
Q2: Is Meta replacing Nvidia with AMD? No. Meta recently expanded Nvidia commitments as well, securing millions of additional Nvidia CPUs and GPUs just one week before the AMD announcement. Meta is pursuing a deliberate multi-vendor strategy to diversify suppliers, reduce dependency, and maintain negotiating leverage.
Q3: What does 6 gigawatts mean in AI infrastructure terms? Six gigawatts represents substantial data center-scale GPU deployment, indicating long-term capital investment. To put it in perspective, 6 GW is roughly equivalent to the energy consumption of six million homes. The metric reflects the severe energy constraints currently facing the global data center market.
Q4: Does this make AMD a serious Nvidia competitor? It strengthens AMD’s competitive position significantly. AMD is projected to grow its AI accelerator market share from roughly 9% in 2025 to over 15% by the end of 2026. However, Nvidia still leads in AI training market share and maintains the deepest software ecosystem with CUDA. AMD’s ROCm platform has improved but still trails CUDA in developer adoption.
Q5: Could this impact semiconductor sector valuations? Yes. Hyperscaler capital spending trends heavily influence chipmaker revenue forecasts and stock pricing. The deal validates that AI infrastructure demand remains robust despite investor concerns about overspending. However, AI-related stocks have taken a beating since the start of 2026, with concerns about oversupply, competitive pressure, and tariff impacts weighing on sentiment.
Sources and References
Yahoo Finance: Meta and AMD Announce 6-Gigawatt GPU Deal as Part of AI Build-Out, AMD Stock Jumps https://finance.yahoo.com/news/meta-and-amd-announce-6-gigawatt-gpu-deal-as-part-of-ai-build-out-amd-stock-jumps-120013697.html
The New York Times: Meta Turns to A.M.D. for A.I. Chips https://www.nytimes.com/2026/02/24/business/meta-amd-chips-ai.html
CNBC: Meta to Use 6GW of AMD GPUs Days After Expanded Nvidia AI Chip Deal https://www.cnbc.com/2026/02/24/meta-to-use-6gw-of-amd-gpus-days-after-expanded-nvidia-ai-chip-deal.html
