AMD's $100B Meta AI Chip Deal Fails to Prop Up Shares, Stock Drops 1.7% to $196.60, Ranks 14th in $6.22B Trading Volume

Market Snapshot

On February 27, 2026, shares of Advanced Micro DevicesAMD-1.70% (AMD) fell 1.70%, closing at $196.60, despite a landmark $100 billion AI chip deal with Meta PlatformsMETA-1.34%. The stock ranked 14th in trading volume, with $6.22 billion in shares exchanged. While the agreement with Meta—a multiyear contract to supply MI450 GPUs and CPUs—was initially reported to drive pre-market gains of over 9% on February 24, recent investor sentiment appears tempered by broader market dynamics and sector rotation.

Key Drivers

The Meta-AMD partnership represents a strategic milestone for AMDAMD-1.70% in the AI chip market, where Nvidia has long dominated. Under the agreement, MetaMETA-1.34% will purchase up to six gigawatts of AMD’s MI450 GPUs and CPUs, with shipments beginning in the second half of 2026. The deal, potentially worth over $100 billion, includes a performance-based warrant allowing Meta to acquire up to 160 million AMD shares at $0.01 apiece—effectively a 10% stake if all milestones are met. This structure aligns Meta’s interests with AMD’s stock performance, requiring the latter to hit a $600 share price target for the final tranche to vest. AMD CEO Lisa Su emphasized the deal as a “vote of confidence” in the company’s AI hardware, particularly as demand for CPUs in AI inference grows.

The partnership also underscores Meta’s strategy to diversify its chip suppliers, reducing reliance on a single vendor. While Meta recently secured a separate multiyear agreement with Nvidia for millions of Blackwell and Rubin GPUs, its collaboration with AMD reflects a broader industry trend of hyperscalers seeking to mitigate supply risks and avoid premium pricing. AMD’s MI450, co-developed with Meta for AI inference, positions the company to challenge Nvidia’s dominance in this segment. However, the deal’s long-term viability depends on AMD’s ability to meet performance benchmarks and scale production, as well as Meta’s continued investment in external chips amid delays in its in-house AI training chip program.

Investor skepticism, however, has tempered the stock’s post-announcement rally. The 1.70% decline on February 27 followed a sector-wide pullback after Nvidia’s strong earnings report, which raised questions about the sustainability of AI spending by hyperscalers. Analysts have also expressed concerns about the return on investment for Meta’s $600 billion AI infrastructure pledge, with some suggesting that the high capital expenditures may not translate to immediate profitability. Additionally, AMD’s decision to grant Meta a 10% equity stake has raised eyebrows, with critics noting it may signal challenges in generating organic demand for its chips.

The deal’s structure further highlights the growing interdependence among AI industry leaders. AMD’s warrant to Meta mirrors a similar agreement with OpenAI in October 2025, where the latter secured chip purchases in exchange for equity. This trend of “circular deals” has drawn scrutiny from investors, who worry about conflicts of interest and the potential for inflated valuations. For AMD, the Meta partnership could accelerate its AI market share gains but also exposes it to risks if Meta’s AI ambitions stall or if the company’s stock underperforms.

In summary, AMD’s stock performance reflects a complex interplay of strategic gains and market caution. While the Meta deal cements AMD’s role in the AI chip race, investor concerns about execution risks, sector rotation, and the long-term profitability of AI infrastructure spending have weighed on the stock. The company’s ability to balance growth opportunities with shareholder expectations will be critical in determining whether this partnership translates into sustained value creation.