AMD Stock Jumps 10% on Meta Chip Deal, Yet $220 Is the Test for Buyers
Advanced Micro Devices, Inc. surged after unveiling a multiyear AI chip agreement with Meta Platforms, Inc., though broader concerns about..
Quick overview
- AMD's stock surged after announcing a $60 billion AI chip agreement with Meta, despite ongoing concerns about its competitive positioning.
- The deal includes a significant supply of AI chips and an option for Meta to acquire a stake in AMD, enhancing their strategic partnership.
- Production delays and unconventional financing arrangements raise questions about AMD's execution and the sustainability of demand.
- Despite strong earnings results, AMD faces intense competition from NVIDIA, highlighting the need for continued innovation and ecosystem development.
Advanced Micro Devices, Inc. surged after unveiling a multiyear AI chip agreement with Meta Platforms, Inc., though broader concerns about execution and competitive positioning remain.
Shares Under Pressure Before Breakthrough Deal
AMD shares had been under renewed scrutiny after slipping below the $200 level, reflecting mounting investor anxiety around its artificial intelligence positioning. A downgrade, tempered long-term growth expectations, and reports of exclusion from a major AI infrastructure collaboration weighed heavily on sentiment.
Markets have increasingly drawn a sharp distinction between perceived AI leaders and second-tier challengers. In that context, AMD’s stock struggled to maintain momentum despite broader enthusiasm around AI infrastructure spending.
Meta Agreement Reignites Optimism
Sentiment shifted dramatically after news broke that AMD agreed to supply Meta with up to $60 billion worth of AI chips over five years. The agreement includes an option for Meta to acquire as much as a 10% stake in AMD, deepening the strategic alignment.
Under the deal, AMD will deliver six gigawatts of AI computing capacity, beginning with its MI450 platform in the second half of 2026. Meta will also purchase customized CPUs tailored to its data center needs. The MI450 is designed primarily for inference workloads—running AI models efficiently at scale.
The announcement sent AMD shares 10% higher, as investors welcomed validation from one of the world’s largest AI infrastructure builders. Meta’s strategy appears aimed at diversifying suppliers rather than relying on a single vendor, potentially broadening AMD’s foothold in hyperscale deployments.
Share Price Reacts Swiftly
Following the earnings release, AMD shares fell sharply, sliding roughly 20% and pushing the stock below the $200 level. On Monday we saw another dip in AMD stock but the 200 SMA (red) acted as support on the daily chart and today we saw strong rebound taking AMD price above $215. However buyers must push AMD stock above the 100 daily SMA (green) which has turned into resistance, in order to resume the uptrend again, otherwise we might see a return below $200.
AMD Chart Daily – Breaking Below the 20 SMA
From a technical perspective, attention is now shifting toward the $220 area on the upside if the rebound accelerates, while on the downside the $185 area comes first, which previously acted as resistance. A sustained break below that level could open the door toward the 2021 highs near $164.
Crusoe Backing Raises Questions
AMD also found support in the $190–$200 range following reports that it is backing a $300 million loan guarantee for cloud startup Crusoe. The financing is reportedly intended to fund purchases of AMD AI chips, with AMD prepared to lease back hardware if necessary.
While the structure may help stimulate near-term demand, it has fueled debate about “circular” arrangements where suppliers effectively support customers’ purchases. Such deals can improve revenue visibility but raise concerns about the sustainability and quality of underlying demand.
Production Delays Cloud Execution
Complicating the picture are reports of manufacturing challenges affecting AMD’s latest AI accelerators. Delays tied to the Instinct MI455X chips could disrupt shipments of Helios rack-scale systems, potentially limiting near-term volumes.
For a company attempting to scale aggressively in AI infrastructure, production bottlenecks risk undermining credibility and slowing revenue ramp expectations.
AMD Q4 2025 Earnings Overview
Headline Results
- EPS (Non-GAAP): $1.53, beating consensus by $0.21
- Revenue: $10.3 billion, exceeding expectations by $630 million
- Market Reaction: Shares declined post-earnings despite the beat
Market Position
- Market Capitalization: ~$394.2 billion
- Exchange / Sector: NASDAQ-listed, leading semiconductor designer
- Context: Results highlight strong execution, but expectations remain elevated
Financial Health Snapshot
- Revenue Growth (3Y): 5.6%, indicating steady expansion
Profitability:
- Net margin: 10.32%
- Gross margin: 48.26%
Balance Sheet:
- Current ratio: 2.31
- Debt-to-equity: 0.06 (very low leverage)
Competitive Landscape Remains Intense
Despite technological progress, AMD continues to face stiff competition from NVIDIA Corporation, whose ecosystem integration, networking capabilities, and software stack remain deeply entrenched across hyperscale customers.
While AMD’s hardware offerings are increasingly competitive, large-scale AI deployments depend heavily on software maturity and ecosystem depth—areas where it must continue to prove itself.
Conclusion: The Meta agreement marks a significant strategic win for AMD and offers tangible validation of its AI ambitions. However, production delays, unconventional financing arrangements, and intense competition suggest that risks have not disappeared. The rally reflects renewed confidence, but sustained gains will likely depend on flawless execution and consistent delivery in an increasingly demanding market.
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