AMD to buy Fei-Fei Li's World Labs for $8.2 billion, its second-largest deal ever

Advanced Micro Devices said Monday it has agreed to acquire World Labs, the "spatial intelligence" startup led by Stanford computer scientist Fei-Fei Li, in an all-stock deal valued at approximately $8.2 billion. The transaction is AMD's second-largest acquisition on record, trailing only its roughly $49 billion purchase of chipmaker Xilinx in 2022, and marks the company's most direct move yet to build AI models in-house rather than simply supplying the chips that run them.

Under the terms disclosed in AMD's filing with the Securities and Exchange Commission, AMD entered into a definitive merger agreement on September 26 to acquire all equity interests in World Labs Technologies Inc. in exchange for AMD common stock, with the number of shares to be set by the company's volume-weighted average trading price over the ten sessions before closing. The deal is expected to close before the end of 2026, subject to regulatory approval and other customary conditions, according to the announcement posted to AMD's newsroom.

The numbers

World Labs was valued at just over $1 billion when it emerged from stealth in September 2024 with $230 million in seed funding from Andreessen Horowitz, NEA and Radical Ventures. It has since raised roughly $1 billion more, according to reporting at the time, pushing its private valuation toward the multibillion-dollar range before AMD's offer arrived. Investors in that later round included AMD itself, alongside Nvidia, Autodesk, Fidelity Management & Research and Emerson Collective — meaning AMD is now buying out a company its chief rival also backed as a minority investor.

AMD shares fell nearly 4%, closing Monday at $608.14, as investors weighed the size of the deal against its uncertain near-term payoff. The stock has more than doubled over the past year on optimism about AMD's AI chip roadmap, and some analysts flagged the acquisition as a rich bet on a two-year-old company with no meaningful product revenue disclosed publicly. By comparison, the Xilinx deal that remains AMD's largest took nearly 18 months to close after regulators in China delayed approval; AMD is aiming to complete the World Labs purchase in a fraction of that time.

Who World Labs is, and why AMD wants it

World Labs, headquartered in San Francisco, builds what it calls large world models: AI systems that generate, reconstruct and simulate interactive three-dimensional environments from text prompts, images or video. Its first commercial product, a tool called Marble that turns a photograph or a few sentences into a navigable 3D scene, launched in November 2025. The company was founded in 2024 by Li along with Justin Johnson, Ben Mildenhall and Christoph Lassner, researchers with backgrounds in computer vision, generative AI and computer graphics, with an eye toward applications in robotics, gaming, architecture and scientific simulation.

Li, 49, is known in AI circles as the creator of ImageNet, the labeled-image dataset that helped trigger the deep-learning boom of the early 2010s, and has been called the "godmother of AI." She is the inaugural Sequoia Professor at Stanford, co-founder of the university's Human-Centered AI Institute, and a former chief scientist for AI and machine learning at Google Cloud. Under the deal, she will join AMD as executive vice president and chief scientist, reporting directly to chief executive Lisa Su, while the World Labs research team continues its work on spatial-intelligence models inside the larger company.

For AMD, the logic is about closing a gap with rivals that increasingly build both the chips and the AI models that run on them. Nvidia, Google and Meta all employ large in-house research teams whose model work informs chip design years in advance; AMD, which has focused primarily on hardware and the ROCm software stack that competes with Nvidia's CUDA, has lacked a comparable frontier-research arm of its own. Acquiring a lab led by one of the field's most prominent researchers gives AMD both talent and a public signal that it intends to compete on the model layer, not only the silicon beneath it.

"Building the compute platforms for the next generation of AI requires a deep understanding of how models are evolving. Fei-Fei and the World Labs team bring exceptional research leadership and model expertise. Together, we can use that insight to develop the hardware, software and systems that will power the next generation of AI and strengthen the open AI ecosystem," Su said in the announcement.

Who is affected

The deal touches several constituencies beyond AMD's own shareholders. World Labs' research team, drawn heavily from Stanford, Google DeepMind and other AI labs, will be absorbed into AMD's engineering organization, according to the companies. Nvidia, which held a stake in World Labs as an investor, will see one of the more closely watched independent spatial-AI labs pulled inside a direct competitor's walls. The startup's other backers, including Andreessen Horowitz and Fidelity, will realize a return on a bet placed just two years ago, paid in AMD stock rather than cash.

Enterprise customers who had begun testing Marble for architecture, gaming and robotics-simulation work face the more immediate question of whether the product continues as a standalone tool or is folded into AMD's chip and software roadmap. AMD said the World Labs team would keep developing its models after the deal closes, but did not commit to keeping Marble available as a separate commercial offering going forward.

Reaction

In her own statement carried in AMD's release, Li framed the move as a natural extension of research she said had run up against the limits of existing hardware. "Advancing the next generation of AI technology requires close collaboration across model research, systems and compute," she said. "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."

Wall Street's response was mixed. Some analysts, per Fortune's coverage of the announcement, called the price steep for a company still early in commercializing its research, while others said acquiring a research team of Li's caliber outright was cheaper and faster than trying to build equivalent capability internally. Retail investor sentiment tracked by market-chatter platforms skewed more favorably, with several traders framing the purchase as a necessary counter to Nvidia's growing model-and-chip integration.

What happens next

The transaction now moves into a regulatory review period; AMD said it anticipates closing before year's end, an unusually fast timeline for a deal of this size that assumes antitrust regulators do not raise complications given World Labs' limited current revenue. Once it closes, Li's arrival as chief scientist will be watched closely as a signal of how AMD intends to weave model research into its chip roadmap ahead of the next generation of its Instinct AI accelerators. AMD has not said whether it will pursue additional research acquisitions, but the World Labs purchase follows a broader pattern across the chip industry of hardware makers buying their way into frontier AI research rather than relying solely on customer relationships with outside model developers.