Compass Investments

Advanced Micro Devices (AMD) stock prices soared in pre-market trading Tuesday after the chip maker announced an important strategic partnership with Meta Platforms to deliver up to 6 gigawatts of AMD Instinct GPUs to power Meta’s latest artificial intell

igence infrastructure. The agreement, valued at $60 billion over a five-year period, is one of the most significant chip supply contracts in the semiconductor industry and marks a significant step by AMD in its quest to compete with dominant rival Nvidia.

The collaboration also includes granting Meta options to acquire up to 160 million AMD shares, potentially making the social media giant a major holder of the chipmaker’s securities. The news triggered a 15% rise in AMD shares in over-the-counter trading, reflecting widespread investor optimism about the scope and strategic importance of the deal.

Under the terms of the agreement, AMD will supply Meta with six gigawatts of AI chips over five years, starting with one gigawatt of its flagship MI450 gas pedal in the second half of 2026. AMD CEO Lisa Su characterized the value of the deal as “double-digit billions of dollars” per gigawatt, emphasizing the exceptional financial weight of the agreement.

Meta also intends to purchase CPUs from AMD, including a special modification customized to meet the specific performance and power efficiency requirements of the social media platform, spanning two generations of AMD processors.

As part of the equity participation, AMD will issue warrants for 160 million shares at a price of one cent. The right to exercise them will come in stages depending on the achievement of AMD’s share price of 600 dollars, as well as the fulfillment of Meta certain technical and commercial criteria.

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AMD shares rose to $214.35 in pre-market trading as of 8:16 a.m. ET on Feb. 24, adding $17.75, or about 9% , from its Feb. 23 closing price of $196.60. The company’s stock has shown some pressure over the past year, losing about 8.2% before Tuesday’s announcement, though its annualized yield over the same period was about 77% . AMD’s 52-week swing range is between $76.48 and $267.08; the stock trades at a P/E multiple of 75.33, and analysts’ average forecast price target for the year is $286.30, with a high of $365.