AMD takes an $8 bln leap at Nvidia

Advanced Micro Devices

01/10/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Pranav Kiran
TORONTO, Sept 30  (Reuters Breakingviews) - Lisa Su has a lot of room for error. The chief executive of chipmaker AMD AMD.O is using pricey stock to buy startup World Labs for $8.2 billion. It’s one among a slew of deals that could help the company bundle both silicon and software for robotics, like larger rival Nvidia NVDA.O does. If the strategy works, it could narrow a profitability gap with the firm led by Jensen Huang. If not, a $1 trillion market value gives the company cover to walk away without significant scars.
AMD has long been in the shadow of Nvidia, a $5.5 trillion powerhouse that emerged as the industry standard for training artificial intelligence models in part thanks to its exclusive CUDA software. Clients in AI, robotics and self-driving built their systems around this combination. In recent years, that’s widened Nvidia’s profitability far ahead of AMD’s.
Su now has an opening to build that profit engine at AMD. A combination of surging demand for traditional processors and market fears that Nvidia is too entangled with the success of OpenAI and Anthropic has made AMD’s stock attractive currency while depressing shares of Nvidia.
There’s sound logic to the deal. World Labs, co-founded by AI pioneer Fei-Fei Li and backed by AMD’s corporate venture capital arm, develops so-called world models that can help train robots to perform tasks by building working representations of three-dimensional reality. 
JPMorgan reckons robotics could be a $2.5 trillion market by 2035. Chips and software make up roughly 6% of a robot’s bill of materials. Drone output last year rose some 30% to around 16 million units worldwide, but production of humanoids and quadrupeds is rising even faster, doubling every 6 and 10 months, respectively, according to research outfit Epoch AI. The deal is also part of a slew of others, including for Taalas, ZT Systems and Silo AI, that should help AMD better combine chips, systems, software and models.
It’s a difficult strategy, given Nvidia’s competing Omniverse platform has a lead in the market. But for AMD, the opportunity cost could be far greater than the failure of a relatively small acquisition.
     
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CONTEXT NEWS 
Advanced Micro Devices said on September 28 that it would acquire Fei-Fei Li's AI startup, World Labs, in an all-stock deal valued at $8.2 billion.
World Labs raised $1 billion in a funding round earlier this year that included an investment from AMD.

(Editing by Robert Cyran; Production by Maya Nandhini)
((For previous columns by the author, Reuters customers can click on KIRAN/pranavkiran.t@thomsonreuters.com))