Advanced Micro Devices Inc. on Monday said it has agreed to acquire World Labs, an artificial intelligence (AI) startup founded by industry pioneer Fei-Fei Li, in an all-stock transaction valued at $8.2 billion.
The deal marks AMD’s aggressive move to expand its AI capabilities beyond software chatbots and into advanced spatial intelligence and physical-world simulation.
Under the terms of the agreement, expected to close by the end of 2026 subject to regulatory approval, Li will join AMD as executive vice president and chief scientist, reporting directly to CEO Lisa Su.
Li, a Stanford University computer science professor often hailed as the “Godmother of AI” for her groundbreaking work on the ImageNet database, founded San Francisco-based World Labs to pioneer world models, deep-learning systems that model how objects, spaces, and physics operate in three-dimensional environments.
The acquisition also fortifies AMD’s position in the high-stakes AI hardware race against chief rival NVIDIA Corp. While NVIDIA maintains a suite of open-weight world models such as Cosmos, AMD has largely focused on text- and video-based models. Integrating World Labs’ technology provides AMD with direct access to frontier workloads, allowing the chipmaker to tailor its hardware, software, and system architectures specifically for next-generation AI infrastructure.
World Labs, which raised $1 billion in funding earlier this year, builds spatial-intelligence models capable of generating, reconstructing, and simulating interactive 3-D environments from text, image, and video inputs. Its flagship technology, Marble, is designed to generate rich entertainment experiences as well as high-fidelity simulated environments crucial for training robotic systems.
As the broader AI industry pivots toward robotics, industrial automation, autonomous vehicles, and general-purpose humanoids, spatial models are considered essential for overcoming the scarcity of real-world training data. Synthetic data generated through realistic physical simulations will allow companies to train physical AI systems more rapidly and safely.
“AMD is buying more than a spatial AI model. It is buying scarce research expertise and a direct role in shaping a category that could drive the next wave of AI infrastructure demand,” said Stephanie Walter, practice leader for AI Stack & Enterprise Application Development at HyperFRAME Research.
“World Labs is developing models that can understand and generate 3D environments,” Walter said. “That moves AMD beyond supporting language models into robotics, simulation, digital twins, and other physical-world applications. Instead of waiting to see what those workloads require, AMD can develop models, software, and compute together. The question is whether World Labs becomes a useful platform for developers and enterprises or primarily strengthens AMD’s own stack.”
The agreement deepens the existing relationship between the two companies. AMD and World Labs established an inference optimization and training partnership last year, with Li making a notable appearance as a guest speaker during AMD’s CES keynote presentation.
In a post announcing the transaction, Li framed the merger as a strategic necessity to scale World Labs’ technical breakthroughs beyond the research laboratory.
“Now that we have tangible proof of the possibilities, we want to do everything we can to accelerate the future,” Li wrote. “To do this requires scaling our efforts, widening our reach, and getting closer to the hardware.” World Labs added in a joint statement that frontier AI development increasingly demands tight integration across research, systems engineering, and raw compute power.
Investors reacted cautiously to the news. AMD stock closed down 3.6% at $607.87 on Monday afternoon before edging up 0.1% in after-hours trading. Despite the initial pullback, AMD shares have surged more than 183% year-to-date, up from approximately $223 at the start of the year.
