ETFs to Buy as META-AMD Sign $100 Billion Worth AI Chip Deal

In a landmark move that further cements the artificial intelligence (AI) revolution, Meta Platforms META has signed a multi-year deal with chipmaker Advanced Micro Devices AMD to deploy up to 6 gigawatts (GW) of its GPUs for AI data centers. As per reports from major media outlets, the agreement, which also includes customized CPUs and a unique performance-based warrant for Meta to acquire 10% stake in AMD, is valued at over $100 billion. 

This pact, coming just days after Meta expanded its commitment to NVIDIA’s NVDA chips, signals an unprecedented acceleration in AI infrastructure spending. 

For investors, such alliances provide a massive tailwind for the AI sector, making Exchange-Traded Funds (ETFs) with high exposure to one or both of these giants an increasingly attractive vehicle for capitalizing on the next leg of the AI revolution.

Before suggesting those ETFs for your portfolio, let us take a deep dive into how this recent deal will be beneficial and why we are advocating ETFs over individual tech giants.

Benefits of the Megadeal

This landmark agreement between Meta Platforms and Advanced Micro Devices should serve as a powerful catalyst for both companies while accelerating growth across the broader AI industry.

For the AI industry, this deal breaks Nvidia's near-monopoly, signaling a definitive shift toward a multi-vendor ecosystem. Meta's massive commitment validates AMD as a first-class alternative, driving innovation, easing supply bottlenecks, and creating a more resilient foundation for future AI breakthroughs.

For AMD, the agreement marks a monumental validation. Locking in a customer of Meta's scale provides a multi-year revenue stream, solidifying AMD's position as a prime AI chip provider, other than NVDA. It's a powerful signal that AMD's Instinct GPUs are viable alternatives to Nvidia's ecosystem, which may help AMD win more similar deals in the future. The performance-based warrant, which allows Meta to acquire up to 160 million shares of AMD, further aligns the two companies’ long-term interests.

For Meta, this deal ensures strategic independence. By securing massive volumes of AMD's latest GPUs and custom CPUs, Meta diversifies its supply chain and gains hardware tuned for its specific workloads. This vast computing power is essential for training sophisticated models, enhancing algorithms and competing with AI rivals.

The Case for ETFs Over Individual Stocks

While the prospects for Meta and AMD look exceptionally bright, single stock exposure carries significant risk. The AI boom has created a circular economy where one company's success is deeply tied to another's, yet a setback for any single player can lead to sharp declines. 

Investing in a diversified ETF can help manage this volatility. For instance, an ETF holding Meta, AMD, Nvidia, and Taiwan Semiconductor TSM allows an investor to benefit from the overall AI infrastructure build-out. Even if AMD faces a hiccup, strength in Nvidia or Meta might offset the loss. Similarly, a broad tech ETF might include giants like Microsoft MSFT, which are also massive AI spenders, capturing the wave from multiple angles without the risk of betting on the wrong horse. 

A diversified basket approach is particularly prudent in the current environment, where massive capital outlays create winners across the supply chain, but not all companies will profit equally.

ETFs to Buy

In light of these recent developments, here are a few ETFs that offer strategic exposure to the AI theme:

Global X Artificial Intelligence & Technology ETF AIQ

With net assets of $7.52 billion, this fund provides exposure to 84 companies that are positioned to benefit from the continued development and adoption of AI technology in their products and services, as well as to firms supplying the hardware that enables AI-driven big data analysis. Its top three holdings include: SK Hynix (4.36%), Samsung Electronics (4.30%) and TSM (3.79%). META holds the ninth position in this fund, with 3.17% weightage, while AMD holds the 17th position with 2.71% weightage. 

AIQ has rallied 23.5% over the past year. The fund charges 68 basis points (bps) as fees. It traded at a good volume of 2.36 million shares in the last trading session. 

iShares U.S. Technology ETF IYW

This fund, with net assets worth $19.69 billion, offers exposure to 140 U.S. electronics, computer software and hardware, and informational technology companies. Its top three holdings include: NVDA (18.21%), Apple AAPL (15.78%) and MSFT (11.63%). META holds the fourth position in this fund, with 3.49% weightage, while AMD holds the eighth position with 2.23% weightage. 

IYW has rallied 21.7% over the past year. The fund charges 38 bps as fees. It traded at a volume of 0.52 million shares in the last trading session. 

Invesco QQQ QQQ

This fund, with a market value worth $394.87 billion, offers exposure to 102 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. Its top three holdings include: NVDA (9.17%), AAPL (7.75%) and MSFT (5.64%). META holds the sixth position in this fund, with 3.69% weightage, while AMD holds the 14th position with 1.74% weightage. 

QQQ has gained 18.2% over the past year. The fund charges 18 bps as fees. It traded at a good volume of 54.87 million shares in the last trading session. 

Invesco AI and Next Gen Software ETF IGPT

With a market value of $696.5 million, this fund provides exposure to 100 companies significantly involved in technologies or products that directly contribute to future software development revenues. Its top three holdings include: Micron Technology MU (11.63%), SK Hynix (8.57%) and NVDA (8.06%). META holds the fifth position in this fund, with 7.43% weightage, while AMD holds the sixth position with 6.76% weightage. 

IGPT has soared 39% over the past year. The fund charges 56 bps as fees. It traded at a volume of 0.02 million shares in the last trading session.  
 

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