Advanced Micro Devices Inc. (AMD) has agreed to acquire World Labs, an artificial intelligence start-up founded by Stanford researcher Fei-Fei Li, in an all-stock transaction valued at approximately $8.2 billion. The San Francisco-based company specializes in developing “world models,” AI systems designed to understand and replicate three-dimensional environments. The deal, expected to close by the end of 2026 subject to regulatory approval, marks a strategic expansion for AMD beyond semiconductor manufacturing into advanced AI model development.
Fei-Fei Li, known for her contributions to modern computer vision through ImageNet, will join AMD as executive vice president and chief scientist following the acquisition. Li emphasized the importance of aligning hardware capabilities with AI research, stating that focused hardware is critical to achieving efficient AI performance. The collaboration between World Labs and AMD began last year with joint efforts to train models on AMD’s chips, which Li described as a “natural fit.”
AMD’s Chief Executive Officer, Lisa Su, said the acquisition would play a key role in shaping the company’s future technology roadmaps by deepening its understanding of evolving AI applications. This move aligns with a broader industry trend in which major chipmakers are extending their activities from hardware production into AI software and model development to capitalize on the growing demand for artificial intelligence solutions.
AMD’s competitor Nvidia has similarly broadened its focus on AI, recently announcing a $13 billion deal to acquire Hugging Face, an AI platform. Nvidia has committed substantial financial resources toward investments and support for AI startups and infrastructure development.
World models, which leverage training on images, video, and text, are emerging as a significant frontier in AI, complementing existing large language models like those that power ChatGPT. These models hold promise for sectors including robotics and gaming, where understanding complex environments is crucial.
World Labs previously raised funds in a $1 billion financing round in February at a valuation of around $5 billion, with AMD and Nvidia among its investors. Other early investors include venture capital firm Andreessen Horowitz.
This acquisition fits within AMD’s broader strategy to enhance its hardware and software ecosystem. Recent moves include its $4.4 billion purchase of ZT Systems in 2025 and the $665 million acquisition of Finnish AI company Silo AI in 2024. AMD has also secured significant chip supply agreements with leading AI developers, such as Meta and OpenAI, both of which include provisions allowing those customers to acquire minority equity stakes in AMD over time.