Key points
- AMD is buying Fei-Fei Li's World Labs with stock
- Li will become AMD's chief scientist after closing
- It's AMD's second-largest deal after Xilinx
AMD (AMD) agreed to acquire World Labs, the AI startup founded by AI researcher Fei-Fei Li, for about $8.2 billion in AMD stock. World Labs develops AI systems that generate interactive 3D environments.
AMD signed the agreement on Sept. 26 and disclosed it Monday. The company expects to close the deal by year-end, subject to regulatory approvals. Li will then become executive vice president and chief scientist, reporting to Chair and CEO Lisa Su, according to AMD's announcement.
"Building the compute platforms for the next generation of AI requires a deep understanding of how models are evolving," Su said. "Fei-Fei and the World Labs team bring exceptional research leadership and model expertise."
How the stock deal works
The number of AMD shares isn't set yet. The 8-K says it will be based on AMD's volume-weighted average price over the 10 trading days ending two trading days before closing. At Monday's closing price of $607.87, the consideration would equal about 13.5 million new AMD shares, or about 0.8% of AMD's 1.63 billion shares outstanding, by our arithmetic. AMD plans to issue the shares privately rather than in a public offering.
AMD was already an investor in World Labs, CNBC reported. The deal is AMD's second-largest on record, behind the roughly $50 billion AMD paid for Xilinx in 2022.
What World Labs makes
World Labs' models build 3D worlds from text, images, and video, and the company also works on robot learning and simulation, AMD said. Earlier this year, Li and Su showed a World Labs model called Marble creating a 3D scene from a few images.
"Intelligent agents, whether it's robots or vehicles or even tools, can learn inside very rich physics-aware digital worlds before they even need to be deployed into the real one, making them much safer," Li said at that presentation, according to CNBC.
"Joining AMD will give our team the resources and engineering depth to accelerate our research and help define the infrastructure needed for the next era of AI," Li said on Monday.
Why a chipmaker wants a model lab
The lab's research on next-generation models will help AMD plan what its AI chips need to handle years in advance, CNBC reported. The deal is also a bet on physical AI, a market Nvidia (NVDA) has been pushing hard. Nvidia expects physical AI revenue to grow from $10 billion to $100 billion in a decade.
Nvidia has been buying too. CNBC put the combined value of Nvidia's Groq asset purchase in December and its proposed Hugging Face acquisition, agreed this month, at $33 billion.
AMD shares closed at $607.87 on Monday, down 3.6% from Friday's close of $630.63. The stock crossed $1 trillion in market value last week.
Cover photo: Fei-Fei Li at AI for Good 2017, by ITU Pictures / Wikimedia Commons, CC BY 2.0, cropped and combined with the AMD logo.
