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Epic AI Computing Power Orders! Meta Drops $100 Billion to Secure AMD Chips with a Five-Year Deal to Challenge Nvidia

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Meta has reached a groundbreaking five-year strategic agreement with AMD (NASDAQ:AMD), valued at up to $100 billion, to procure 6 gigawatts of computing power chips and deeply customize the MI450 processor. As part of the deal, Meta will receive warrants to purchase up to 160 million shares of AMD, potentially owning up to 10% of the company.

This move aims to secure computing power supply through equity bundling and reduce reliance on Nvidia, marking a new phase in the AI arms race where tech giants are accelerating the global competition by deep customization and reshaping their supply chains.

Meta Platforms (NASDAQ:META) and AMD (NASDAQ:AMD) have finalized a massive, unprecedented five-year deal to purchase AI chips and data center equipment, valued at up to $100 billion. This collaboration signals an escalation in the AI infrastructure investment race among global tech giants, while also providing AMD with a key strategic foothold in the computing power market traditionally dominated by Nvidia.

According to the latest disclosed agreement, Meta Platforms (NASDAQ:META) will purchase up to 6 gigawatts of AMD (NASDAQ:AMD) processors and data center equipment over the next five years. Reports from Reuters and The Wall Street Journal estimate the total value of the deal to be between $60 billion and over $100 billion. The first batch of devices, featuring the new MI450 graphics processing unit (GPU) from AMD, is set to begin deployment in the second half of this year.

As part of an innovative financial arrangement, Meta Platforms (NASDAQ:META) will receive warrants to buy up to 160 million shares of AMD (NASDAQ:AMD) at a price of $0.01 per share. If specific technical and business milestones are met and AMD’s stock price reaches $600 in the future, Meta could potentially acquire around 10% of AMD, becoming one of its core shareholders.

The announcement quickly triggered a strong market reaction, with AMD (NASDAQ:AMD) shares rising nearly 7% in early trading, reaching $209.80. This deal not only boosts AMD’s revenue prospects but also highlights how large tech companies are reshaping industry supply chains through equity-linked partnerships to secure AI computing power.

Deep Customization and Accelerated Computing Power Deployment

At the heart of this partnership is a highly customized hardware solution. AMD (NASDAQ:AMD) will provide Meta Platforms (NASDAQ:META) with a range of products, including customized central processing units (CPUs), optimized for Meta’s low-power, high-performance needs.

According to Bloomberg, AMD CEO Lisa Su stated that the company is providing “high-performance, energy-efficient infrastructure optimized for Meta’s workloads,” and noted that Meta assisted in the design of the MI450 chip. This chip is primarily optimized for the “inference” phase of AI (the process by which AI models respond to user queries). The Wall Street Journal pointed out that the MI450 uses a “chiplet” architecture design, which makes it easier to customize compared to traditional monolithic silicon chips.

“We have very ambitious goals,” said Santosh Janardhan, Meta’s global infrastructure head, in an interview. “Being able to define the required technical specifications more tightly was one of the key reasons why Meta and AMD formed this deep partnership.”

Challenging Nvidia’s Market Dominance

This deal holds significant strategic importance for AMD (NASDAQ:AMD). Currently, Nvidia (NASDAQ:NVDA) controls approximately 90% of the global AI chip market, with a market value of $4.66 trillion, while AMD’s market cap is around $320 billion.

Just last week, Meta pledged to purchase millions of Nvidia processors to fuel its AI expansion. However, to reduce supply chain risks and enhance bargaining power, tech giants are actively seeking reliable “second suppliers.” Ben Bajarin, a chip analyst at Creative Strategies, pointed out:

“Meta is in a unique position to control the entire tech stack—they can use anyone’s computing power. This deal also underscores the current limitations in the computing power industry.”

Santosh Janardhan added that given Meta’s massive need for data centers and infrastructure, multiple chip suppliers and technological paths are required. He emphasized that Meta will continue to procure chips from Nvidia while also advancing its in-house AI chip development projects.

Equity Bundling and High Capital Expenditures

The structure of Meta’s acquisition of AMD (NASDAQ:AMD) stock warrants has drawn attention to financing models in the AI industry. Last October, OpenAI also reached a very similar agreement with AMD (NASDAQ:AMD). This model, known as “circular financing,” involves customers securing equity or investment commitments from suppliers through large procurement orders. It is increasingly becoming a common method for AI giants to lock in key technologies.

This partnership also reflects the massive capital expenditure pressures facing tech giants in the AI era. Meta Platforms (NASDAQ:META) CEO Mark Zuckerberg has previously identified AI as the company’s top priority, announcing ambitious plans to build “tens of gigawatts” or even “hundreds of gigawatts” of computing power. According to Meta’s earnings report released last month, the company’s capital expenditures for 2026 could reach up to $135 billion, with plans to build around 30 data centers in the U.S. and globally to keep up with the intense global AI race and compete with companies like OpenAI.

Lisa Su remarked that the Meta-AMD partnership is “moving to the next level.” For AMD, which achieved $34.6 billion in revenue last year, even an additional $10 billion in annual sales would significantly accelerate its race to catch up with Nvidia (NASDAQ:NVDA) in the AI chip market.

South Korea’s Semiconductor Exports Surge Over 70%! Philadelphia Semiconductor Index Hits Record High as Global “Chip War” Escalates

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The semiconductor industry is flashing a major signal.

According to the latest data, during the first 20 days of this year, semiconductor exports from South Korea—often called the “canary in the coal mine” for the global economy—totaled $10.73 billion (approximately 74.7 billion RMB), representing a massive year-over-year surge of over 70%. This indicates that global demand for semiconductors remains exceptionally robust amidst the AI (Artificial Intelligence) wave. Following the news, shares of memory chip giant Samsung Electronics spiked, rising more than 3% during intraday trading on the 21st.

Chip stocks rallied broadly on the 21st. The Philadelphia Semiconductor Index rose 3.18%, hitting a new all-time high. Intel (NASDAQ:INTC, ) surged over 11%, Advanced Micro Devices (NASDAQ:AMD) rose more than 7%, Micron Technology (NASDAQ:MU) gained over 6%, ARM (NASDAQ:ARM) climbed over 6%, and Microchip Technology (NASDAQ:MCHP) rose over 4%, while Broadcom (NASDAQ:AVGO) fell by over 1%.

Prior to this, U.S.-listed storage chip stocks also saw a massive rally on Tuesday, with SanDisk soaring over 10% at one point. Institutional analysts pointed out that this round of price hikes in memory chips is not driven by short-term market sentiment, but by the dual factors of “limited advanced process capacity” and “rigid growth in AI server demand.” The sustainability of this trend is significantly stronger than historical cycles.

A Surge of Over 70%

On January 21, local time, data disclosed by the South Korean customs department showed that from January 1 to January 20, 2026, South Korea’s total exports reached $36.36 billion, a year-over-year increase of 14.95%. Imports totaled $36.98 billion, up 4.2%, resulting in a trade deficit of approximately $600 million.

By product category, semiconductor exports during the first 20 days of the month reached $10.73 billion, a year-over-year jump of 70.2%. This accounted for 29.5% of total exports, an increase of 9.6 percentage points compared to the same period last year.

Exports of petroleum products reached $2.46 billion (up 17.6%), and steel products totaled $2.4 billion (up 1.2%). However, automobile exports fell 10.8% to $2.87 billion, and ship exports saw a sharp decline of 18.1%.

As a major global semiconductor exporter and home to two memory giants—Samsung Electronics and SK Hynix—South Korea has become one of the biggest winners as the global AI boom drastically boosts demand for memory chips.

Driven by this demand, South Korea’s exports in December 2025 grew 13.4% year-over-year to $69.6 billion, marking the 11th consecutive month of growth.

For the full year of 2025, South Korea’s total exports reached a record high of $709.7 billion, marking the first time in history that annual exports have surpassed the $700 billion threshold.

According to the latest data from the South Korean Ministry of Science and ICT, thanks to the expansion of demand for high-value-added memory and the continuous rise in prices of general semiconductors such as DRAM, South Korea’s annual semiconductor exports in 2025 reached a record $173.48 billion, up 22.1% year-over-year. This marks the second consecutive year of double-digit growth.

Significant Upgrades

Citigroup has significantly raised the price targets for storage chip giants, most notably hiking SanDisk’s target from $280 to $490 per share—a 75% increase.

Citigroup expressed optimism regarding the strong demand for data center memory, favorable supply-demand conditions, and the company’s powerful competitive moat. SanDisk is expected to continue growing its market share in the enterprise SSD (Solid State Drive) segment.

Simultaneously, Citigroup maintained a “Buy” rating on Seagate Technology, raising its target price from $320 to $385 (an increase of about 20%). Western Digital’s target was also raised from $200 to $280 (an increase of about 40%).

The Citigroup report noted that these companies remain the primary beneficiaries of “strong demand from hyperscale data centers supporting rising storage prices.” Spending by hyperscalers “remains strong,” which will drive demand for power, storage, connectors, and fiber optics.

Divya Mathur, an emerging markets equity fund manager at ClearBridge Investments, also explicitly stated that the market is significantly undervaluing the memory chip demand driven by AI development.

Furthermore, an operations executive at Micron Technology emphasized in a recent interview that the global memory chip shortage has intensified over the past quarter and will persist beyond 2026. PC and smartphone manufacturers are also joining the “scramble” to lock in memory chip supplies for 2026 and beyond. The core reason is the explosive growth in demand for high-end semiconductors for AI infrastructure.

SK Hynix revealed that its chip production capacity for 2026 is already fully sold out, and its high-end memory products for AI are completely booked.

TrendForce also noted in its latest report that the current price increases in storage chips are not driven by temporary market sentiment. Instead, they result from the combined effects of “limited capacity in advanced processes” and “rigidly growing demand for AI servers,” making this cycle notably more durable than previous ones.

Data shows that capital expenditures by the world’s eight leading cloud providers are expected to grow by approximately 65% year-over-year in 2025. Annual reports from IDC and Gartner confirm that AI servers have become the fastest-growing segment in data center IT investment, with storage systems as critical infrastructure set to benefit significantly from this trend.

“Magnificent Seven” Group Strategy Fails: Wall Street Says It’s Time to “Pick and Choose” Best Stock in 2026

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In recent years, many investors followed a simple recipe to beat the market: heavy concentration in U.S. mega-cap tech stocks.

While this strategy yielded handsome rewards for a long time, it lost its luster in 2025. For the first time since the Federal Reserve began its rate-hiking cycle in 2022, the majority of the “Big Tech” firms underperformed the S&P 500 (SPX). Although an index tracking the “Magnificent Seven” rose 25% in 2025—outpacing the S&P 500’s 16%—this gain relied entirely on the explosive performance of Alphabet (GOOGL) and Nvidia (NVDA).

Many Wall Street professionals expect this divergence to persist through 2026 as earnings growth for tech giants slows and skepticism grows regarding the returns on massive Artificial Intelligence (AI) investments. Early 2026 data supports this view: the Magnificent Seven index is up only 0.5%, while the S&P 500 has climbed 1.8%. In this environment, selective stock picking within the group has become critical.

“The market is no longer a ‘one-size-fits-all’ trade,” said Jack Janasiewicz, Lead Portfolio Strategist at Natixis Investment Managers Solutions, which manages $1.4 trillion. “If you just blindly buy the whole basket, the laggards are likely to cancel out the winners.”

Cooling Enthusiasm and Narrowing Growth Gaps

This three-year bull market has been spearheaded by tech titans. Since the bull run began in October 2022, just four companies—Nvidia, Alphabet, Microsoft (MSFT), and Apple (AAPL)—have accounted for over one-third of the S&P 500’s total gains. However, as capital begins to rotate into other S&P 500 constituents, enthusiasm for Big Tech is cooling.

With earnings growth slowing, investors are no longer satisfied with the “AI will make us rich” narrative; they want tangible financial results. Data indicates that earnings growth for the Magnificent Seven is projected to be around 18% in 2026—the slowest since 2022. This narrows their lead significantly over the other 493 S&P 500 companies, which are expected to see a 13% increase.

“We are seeing the breadth of corporate earnings growth expanding, and that trend will continue,” noted David Lefkowitz, Head of U.S. Equities at UBS Global Wealth Management. “Tech is no longer the only game in town.”

One silver lining for the group is that valuations have moderated. The Magnificent Seven index currently trades at 29 times forward earnings, well below the highs of over 40 times seen at the start of the decade. By comparison, the S&P 500 trades at 22 times, and the Nasdaq 100 at 25 times.

Outlook for the Magnificent Seven in 2026:

Nvidia

The dominant AI chipmaker is under pressure from rising competition and concerns over the sustainability of capital expenditure from its largest customers. While the stock has soared roughly 1,100% since late 2022, it has retreated 8% since hitting an all-time high on October 29 last year.

Rival AMD (AMD) has secured data center chip orders from OpenAI and Oracle (ORCL), while major customers like Google are accelerating the deployment of in-house custom chips. Nevertheless, Nvidia’s revenue continues to grow rapidly as chip demand still outstrips supply. Wall Street remains bullish: 76 out of 82 analysts rate it a “Buy,” with an average price target implying 39% upside—the highest among the Seven.

Microsoft

2025 marked the second consecutive year Microsoft underperformed the S&P 500. As a major spender in the AI race, Microsoft is expected to see capital expenditures approach $100 billion for the fiscal year ending June 2026, with analysts predicting a further climb to $116 billion the following year.

While data center expansion has boosted cloud revenue growth, the company has struggled to convince customers to pay significantly more for AI-integrated software. Brian Mulberry, Client Portfolio Manager at Zacks Investment Management, notes that investors are waiting for these massive investments to translate into real bottom-line results.

Apple

Apple took the most conservative approach to AI among the group, a strategy that weighed on its stock in early 2025, with shares falling nearly 20% by August. However, Apple subsequently became an “Anti-AI play,” attracting investors wary of high-cost AI risks, and surged 34% by the end of 2025. Strong iPhone sales have reassured investors that core demand remains robust.

The key for 2026 is accelerating growth. While the company narrowly avoided its longest losing streak since 1991 last week, momentum has slowed. Markets expect revenue to grow 9% in the fiscal year ending September 2026—the fastest since 2021. With a forward P/E of 31x (second only to Tesla), Apple’s performance must dazzle to sustain its valuation.

Alphabet (Google)

A year ago, investors feared Google was falling behind OpenAI. Today, Google is a consensus “darling,” leading the AI field on multiple fronts. Its Gemini AI model has received widespread acclaim, and its in-house TPUs are seen as a major revenue driver that could even challenge Nvidia’s dominance.

In 2025, Google was the best performer of the Seven, rising over 65%. However, with its market cap nearing $4 trillion and a P/E of 28x (well above its five-year average of 20x), analysts expect more modest gains of about 3.9% in 2026.

Amazon

After seven consecutive years as the laggard of the group, Amazon (AMZN) has staged a strong comeback in early 2026. Optimism centers on its cloud business, AWS, which recently posted its fastest growth in years. Investors expect efficiency gains from warehouse automation and robotics to pay off soon. Clayton Allison, Portfolio Manager at Prime Capital Financial, believes the market has yet to fully price in this value, drawing parallels to Google’s turnaround last year.

Meta

Meta Platforms (META.) most clearly reflects investor skepticism regarding “AI overspending.” CEO Mark Zuckerberg has spent billions on acquisitions and talent, including a $14 billion investment in Scale AI. However, after Meta raised its 2025 capex to $72 billion and forecasted “significantly higher” spending for 2026, the stock tumbled. Since its August 2025 high, the stock has dropped 17%. Meta’s primary task in 2026 is proving these investments drive profit growth.

Tesla

Tesla (TSLA) flipped from laggard to leader in the second half of 2025 as Elon Musk pivoted focus from lackluster EV sales to autonomous vehicles and robotics, sending shares up over 40%. This rally pushed Tesla’s forward P/E to a staggering 200x. While revenue is expected to return to 12% growth in 2026 after a stagnant period, Wall Street analysts remain pessimistic about the stock price, with an average target predicting a 9.1% decline over the next 12 months.