Advanced Micro Devices shares climbed 10% to $210.29 on Tuesday after the company disclosed a supply agreement with Meta Platforms that could reach 6 gigawatts of compute capacity. The deal, however, comes with provisions and market reactions that have prompted caution from Mizuho, which said the stock's pop is likely to be temporary.
The Meta agreement includes warrants equal to 10% of AMD as part of the arrangement to secure multi-year deliveries. The contract calls for the deployment of millions of EPYC CPUs and MI450 Helios GPU server racks across multiple generations, with initial installations scheduled to begin in the second half of 2026. The supply commitment is for at least three years and emphasizes inference computing capacity.
The announcement triggered negative moves in competitors' shares. Nvidia and Broadcom both turned lower after AMD's news. Nvidia previously signed a large supply deal with Meta for GPUs and Vera CPUs without issuing warrants. Broadcom is reported to be developing a bespoke ASIC for Meta that will start ramping later this year.
Mizuho highlighted market positioning ahead of recent events. The firm noted that multi-manager hedge funds were shorting AMD and Broadcom before Nvidia's earnings report and intended to add to those shorts going into Nvidia's GTC keynote on March 16. After AMD's share bounce, Mizuho said it received pushback from hedge funds and that those managers expect the stock to fall over the next 48 hours.
Valuation metrics cited by InvestingPro indicate AMD trades at a PEG ratio of 0.45, which the data provider characterizes as undervalued relative to the company's growth prospects. Despite that valuation signal, Mizuho and some market participants remain skeptical about the durability of the stock's recent gains.
The structure of the Meta deal drew comparisons to previous supply agreements that included equity-linked components. Mizuho pointed to Marvell Technology's earlier supply arrangements with Amazon, noting that Marvell's stock declined 25% over the past 52 weeks while the semiconductor index rose 15% over the same period. The bank suggested AMD management might have amplified the market impact by timing the announcement differently, specifically by waiting until March 13, the Friday before Nvidia's GTC keynote.
In other corporate developments, AMD named Ariel Kelman as Senior Vice President and Chief Marketing Officer to lead its global marketing organization. Separately, UBS reduced its price target on AMD to $310 from $330 but kept a Buy rating, and noted a $1 billion reduction in the company's gaming business for 2026. DA Davidson initiated coverage with a Neutral rating and set a $220 price target, describing AMD as a "marginal AI accelerator player."
Mizuho analyst Jordan Klein commented on the recent movement in AMD shares, saying the bounce may not hold in the short term. Those remarks, together with hedge fund positioning and the warrant-based structure of the Meta agreement, contribute to an expectation among some market players that the rally could fade.
Bottom line: The Meta supply deal is significant in scale and scope, but the combination of warrants, competing supplier relationships, hedge fund short positions, and differing analyst views has created immediate volatility. Market participants and analysts are parsing the arrangement's terms and timing as they weigh the near-term outlook for AMD shares.