AMD Is Betting More Than $8 Billion On Fei-Fei Li’s World Labs. Its Stock Is Up.

AMD is acquiring artificial intelligence startup World Labs for $8.2 billion, bringing one of the field's most influential researchers, Fei-Fei Li, directly into the chipmaker as it intensifies its competition with Nvidia for the future of AI computing.

The all-stock transaction was announced on Monday and is expected to close by the end of 2026, subject to regulatory approvals and customary closing conditions. Li will join AMD as executive vice president and chief scientist, reporting to Chair and CEO Lisa Su, while the World Labs team will continue its AI model research, according to the company. AMD's stock is climbing on Tuesday, gaining 1% at 11:27 a.m. ET.

The acquisition represents a significant expansion of AMD's AI strategy beyond processors and accelerators. World Labs specializes in "world models," AI systems designed to generate and interact with three-dimensional environments.

"Building the compute platforms for the next generation of AI requires a deep understanding of how models are evolving," Su said in announcing the transaction. She said World Labs would bring model expertise and research capabilities that could help AMD develop the hardware, software and systems required by emerging forms of AI.

Li is one of the best-known figures in modern artificial intelligence. A Stanford University computer science professor, she played a pivotal role in the development of computer vision through ImageNet, the massive image database and associated competitions that helped accelerate advances in deep learning.

She founded World Labs in 2024 around the idea that increasingly capable AI systems would need to understand more than language. Instead, they would need spatial intelligence and an understanding of geometry, physics, and how objects interact in the real world.

That vision has attracted substantial investor interest. World Labs raised $1 billion earlier this year, after emerging from stealth in 2024 with $230 million in funding and a valuation of about $1 billion. Its investors have included AMD, Nvidia, Autodesk, Fidelity and Emerson Collective.

That potential to interact with high-quality simulated worlds makes World Labs strategically significant as companies including Tesla and Figure pursue increasingly capable robots and autonomous machines.

AMD and World Labs were already closely connected before the acquisition. The companies formed a partnership focused on inference optimization and AI training last year, and Li appeared during AMD's CES presentation earlier this year to demonstrate Marble.

The deal also gives AMD another avenue to challenge Nvidia's formidable AI ecosystem. Nvidia's dominance has extended beyond GPUs into software, networking and AI models. The company has already released Cosmos, a family of world foundation models intended for physical AI applications.

AMD, meanwhile, has been working to expand the software and model ecosystem surrounding its AI accelerators. In announcing the transaction, Li said World Labs had reached the point where scaling its breakthroughs required widening its reach and "getting closer to the hardware."