Chip Deals Turn the AI Race into a Share Swap Game

Advanced Micro Devices is changing how it competes with Nvidia in the AI chip market. Instead of just selling hardware, AMD now offers customers a chance to own part of the company when they buy its chips. The latest example is Meta, which will purchase billions of dollars in AMD processors for new data centers and can also acquire up to a 10 percent stake in the chip maker. Earlier this year, AMD struck a similar agreement with OpenAI. These kinds of circular deals have become common during the AI boom. Nvidia, for instance, has invested heavily in its customers such as OpenAI, Elon Musk’s xAI and CoreWeave. Those companies then spend their money on Nvidia chips. Likewise, Microsoft, Google and Amazon invest billions in AI firms that rely on Nvidia for computing power.Investors are wary of this pattern. The repeated loops between AI companies and chip makers blur the line between supply and demand, making it hard to see where growth starts. Some analysts argue that only the biggest tech firms can afford to fund these expensive AI projects, betting that their technology will eventually dominate. If the expected demand fails to materialize, these investments could stall. The new AMD‑Meta partnership shows how chip makers are turning to equity deals as a way to secure big orders and deepen relationships with key AI developers. It also highlights the growing interdependence between hardware suppliers and software innovators in a rapidly evolving market.