AMD acquiring Fei-Fei Li's World Labs AI firm in deal worth $8.2 billion

Lisa Su, chair and chief executive officer of Advanced Micro Devices Inc. (AMD), during the 2026 CES event in Las Vegas, Nevada, US, on Monday, Jan. 5, 2026.

Bridget Bennett | Bloomberg | Getty Images

AMD announced on Monday that it has entered into an agreement to acquire World Labs, a San Francisco-based AI lab developing a kind of model called a world model, which can be used to simulate 3D environments.

AMD said on Monday that the lab was acquired for about $8.2 billion in an all-stock transaction. The chipmaker had previously invested in World Labs.

For AMD, it's the chipmaker's second-largest purchase on record, following the roughly $50 billion it paid for Xilinx in 2022.

AMD is making its biggest splash yet in the AI M&A market at a time when tech's largest companies are opening their wallets for top engineering and research talent, even for businesses that are relatively nascent.

OpenAI purchased Jony Ive's AI devices startup io for about $6.4 billion last year to bring in the famed iPhone designer. Nvidia spent a combined $33 billion on AI chipmaker Groq and open-source platform Hugging Face, buying assets from the former in December and agreeing to acquire the latter this month. And Meta shelled out $14 billion in 2025 for a minority stake in Scale AI in a deal that brought in the startup's founder, Alexandr Wang, to spin up a new AI division.

AI researchers expect world models will be able to help develop robots and other physically-grounded artificial intelligence applications. AMD plans to keep World Labs separate from its chipmaking business until the transaction closes later this year.

The lab's research on next-generation models will allow AMD to plan for what its AI chips need to be capable of years in advance.

World Labs was founded by AI researcher Fei-Fei Li, who is widely seen as an AI pioneer as a Stanford professor, and who previously worked for Google leading AI research.

Li, in a social media post on Monday, called Su a "great friend."