Advanced Micro Devices jumped over 7% in early trading on Tuesday after the Santa Clara chipmaker signed a multiyear supply deal with Meta Platforms. The agreement gives AMD new momentum as it tries to gain ground in the competitive AI accelerator market.

As part of the deal, Meta will buy graphics processing units from AMD that add up to 6 gigawatts of compute power for its next-generation AI infrastructure. Deployment will start in the second half of this year. AMD is also giving Meta a performance-based warrant for up to 160 million shares, about 10% of the company. The final shares will vest if certain deployment goals are met and AMD’s stock hits $600. At the open, shares were trading near $216.

AMD Chief Financial Officer Jean Hu called the deal a catalyst for “substantial multiyear revenue growth.” This shows the company is making a strong push to win major customers and strengthen its AI hardware plans.

The agreement arrives one week after Meta separately secured a long-term chip supply arrangement with Nvidia, and the structural difference. This deal comes just a week after Meta signed a long-term chip supply agreement with Nvidia. The two deals are different in key ways. Meta did not get any equity warrants in the Nvidia deal, which analysts say highlights the companies’ different positions in the GPU market. Nvidia is much larger in data center revenue, with Wall Street expecting about $61 billion in fourth-quarter sales, compared to AMD’s $5.4 billion for the same period, which is still a 39% increase from last year.me warrant structure, the same deployment window — suggesting AMD is standardizing on a playbook of equity-linked incentives to secure commitments from hyperscale and frontier AI operators.

Meta plans to spend up to $135 billion this year on AI data center infrastructure. The chips from AMD will be used mainly for inference workloads that run the company’s large language models.

While this partnership is a strong sign of support for AMD’s next-generation chips, some experts say the warrant part of the deal raises questions about real demand. The equity offer, which works like a sales discount for tax reasons, shows how much pressure AMD faces in trying to challenge Nvidia’s dominance. This situation is not likely to change much soon.