AMD's $60 billion Meta deal includes equity stake, while Nvidia keeps its chips close

Why AMD's megadeal with Meta shows Nvidia is still the best game in town

Advanced Micro Devices inked another monster AI chip sale agreement in its efforts to pry market share from leader Nvidia . But a closer look at the structure of the deal reinforces that Nvidia is still the best game in town. On Tuesday, AMD and fellow Club name Meta Platforms unveiled what they're calling a strategic arrangement that could bring in north of $60 billion in sales to the chipmaker over a multiyear period. Meta is committing to buy 6 gigawatts worth of AMD's graphics processing units (GPUs) for its AI data centers -- and each gigawatt is worth "double-digit billions" of revenue, AMD CEO Lisa Su said in a CNBC interview with Jim Cramer, shortly after the announcement. The deal also does something else: It gives Meta a path to owning almost 10% of AMD, if certain deployment milestones and stock-price thresholds are met, at practically no cost. AMD gave OpenAI a similar equity award as part of its chip sale agreement in October with the ChatGPT creator. As Nvidia investors consider the competitive implications of AMD's close ties with Meta and OpenAI, they should take solace in the fact that AMD is willing to dilute its own shareholders in the process. Meta and OpenAI could each be entitled to purchase up to 160 million shares of AMD's common stock, if all vesting milestones are reached. That's equal to roughly 20% of AMD's current 1.63 billion shares outstanding. AMD YTD mountain Advanced Micro Devices YTD The market, for now, seems to be looking past any future dilution concerns, sending AMD shares up more than 10% at their highs of Tuesday's session. If a gain of that magnitude were to hold at the close, the stock would turn positive for the year. Meta shares were up modestly but still down for 2026 on worries about how much money the company is spending in the AI race. When Nvidia announced its own blockbuster chip deal with Meta last week, giving away a chunk of the company to the Instagram parent was nowhere to be found in the press release. A search of securities filings for any additional disclosures turned up nothing. Meanwhile, Nvidia is actually in talks to invest up to $30 billion in OpenAI , not the other way around. "AMD is working out of a position of weakness," Jim said Tuesday on the Morning Meeting. Nvidia, on the other hand, is clearly operating from a position of strength, despite competition from AMD and custom silicon from the likes of Google parent Alphabet and its design partner Broadcom , a fellow Club stock. Nvidia has piles of cash that it's using to invest in companies -- such as Intel , CoreWeave , and Synopsys , in addition to OpenAI and other startups -- and to spend on its own innovation efforts to stay steps ahead in the technology race. Having the best technology enables companies to reach supply agreements on merit without having to give up stock. Club name Corning also demonstrated that in January, when it agreed to sell $6 billion worth of fiber-optic data center cabling to Meta. No equity awards needed. If one of Nvidia's customers decided to drop them, the demand would likely be picked up somewhere else. AMD doesn't have that luxury at this point, which explains why it is offering Meta skin in the game. The competitive dynamics will still be a discussion point on Wednesday night when Nvidia reports earnings . For its part, AMD defends the decision to offer Meta and OpenAI ownership stakes in the company. In the press releases for both deals, AMD said the agreements will be accretive to its adjusted earnings per share. The Meta tie-up, in particular, is "absolutely a win-win from our shareholders' standpoint," Su said on CNBC. She stressed that the equity awards are performance-based, rather than just a blank-check issuance. In other words, AMD will be generating billions in revenue from Meta before investors need to worry about dilution. "What we want to do is place bets on who we think are going to be the winners in AI innovation going forward. This is about a strategic partnership," Su said. "It really is clearly an opportunity to expand beyond what a regular commercial deal would've been." Su also fielded questions on the equity awards during a question-and-answer call with Wall Street analysts Tuesday morning. Vivek Arya of Bank of America pointedly asked: "If the product is so good, why does AMD need to give up 10% of your equity?" In response, Su repeated that the deal will help grow AMD's earnings per share. She also said investors should consider "what it's doing across our entire roadmap and our future roadmap going forward." With Meta in line for an ownership stake in AMD, Su said the companies have aligned incentives. And, as Meta puts billions of dollars' worth of AMD GPUs into its data centers, AMD will benefit from that increased revenue scale and ecosystem maturity, she argued. All of that may be true. We don't necessarily fault AMD for inking these agreements because AI is such a lucrative market. For a compute-starved Meta, it makes plenty of sense to secure chips from multiple avenues, too. Still, it is yet another reminder that Nvidia remains in a league of its own -- and shareholders like us aren't forced to take a smaller piece of the pie to keep it that way. (Jim Cramer's Charitable Trust is long NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. 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Jim Cramer Asked Lisa Su, 'Why Is Meta Taking A Share In You?' When Nvidia Didn't Give Equity: Here Is What She Said - Advanced Micro Devices (NASDAQ:AMD), Corning (NYSE:GLW)

On Tuesday, Jim Cramer questioned why Advanced Micro Devices, Inc. (NASDAQ:AMD) structured its massive AI chip deal with Meta Platforms, Inc. (NASDAQ:META) to include equity warrants when Nvidia Corp (NASDAQ:NVDA) secured a similar business without giving up shares. Cramer Questions AMD's Meta Warrant Structure During a CNBC interview, Cramer pressed Lisa Su on AMD's decision to issue Meta performance-based warrants for up to 160 million shares -- roughly 10% of the chipmaker -- as part of a multiyear AI infrastructure agreement. Cramer pointed out that Nvidia last week announced a major AI partnership with Meta without offering equity. "Why is Meta taking a share in you?" he asked, noting that other suppliers have landed large contracts without similar concessions. The AMD-Meta agreement centers on deploying up to 6 gigawatts of AI compute capacity powered by AMD's Instinct GPUs. The warrants vest in stages as shipment milestones are achieved, with the final tranche tied to performance targets. Lisa Su Calls Deal Transformational For AMD Shareholders Su defended the structure, describing the partnership as a "win for AMD, a win for Meta and it's a win for our shareholders." She said the AI accelerator market could reach $1 trillion over the next five years and argued that scale and co-optimization are critical. "We are at a time in a place where the industry is moving so fast," Su said, adding that it allows them to optimize hardware, software and systems together at a large scale. Addressing skepticism that AMD may have needed to offer equity to secure the deal, Su said that the warrants are performance-based. Every gigawatt of compute represents double-digit billions of revenue, she said, adding that the structure ensures mutual upside. Meta, OpenAI Fuel Massive AI Deals With Corning And AMD Meanwhile, in 2025, AMD signed a multiyear agreement with OpenAI that could reportedly generate up to $135 billion in revenue. The deal calls for deploying 6 gigawatts of AMD GPUs to power OpenAI's expanding data center infrastructure over the coming years. In return, OpenAI could receive up to 160 million AMD shares, valued at roughly $75 billion, or about 10% of the company, through performance-based warrants that vest in stages. The final tranche would be triggered by the sixth gigawatt deployment and a $600 AMD share price. Price Action: AMD shares jumped 8.77% during Tuesday's regular session and added another 0.26% in after-hours trading, according to Benzinga Pro. Meta gained 0.32% during the regular session but declined 0.17% in after-hours trading. AMD shows a strong long-term price trend but weaker performance in the short and medium term, along with a low value ranking, according to Benzinga's Edge Stock Rankings. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo: Tada-Images / Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.