- Advanced Micro Devices is acquiring World Labs in an $8.2 billion all-stock deal, bringing AI pioneer Fei-Fei Li and her spatial-intelligence team into AMD as the chipmaker expands beyond conventional AI workloads and deeper into robotics, simulation, and physical AI.
Advanced Micro Devices Inc. (NASDAQ: AMD) has agreed to acquire World Labs for approximately $8.2 billion in an all-stock transaction, giving the chipmaker direct access to a company focused on AI models that understand and simulate three-dimensional environments. The deal was announced Sept. 28 and is expected to close by the end of 2026, subject to regulatory approvals.
World Labs was founded by Fei-Fei Li, a leading computer-vision researcher known for creating ImageNet. Under the agreement, Li will join AMD as executive vice president and chief scientist and report directly to CEO Lisa Su.
The transaction gives AMD a new layer in its AI strategy. Rather than acquiring another conventional chatbot company, AMD is buying technology centered on spatial intelligence and world models, which are designed to represent how objects, spaces, and physical environments behave.
Reuters described the deal as a move into research on physical AI, while CNBC's report on AMD and World Labs highlighted Li's role and the company's focus on AI systems that can operate in three-dimensional environments. Fortune similarly reported that the technology is aimed at applications including robotics and autonomous machines.
AMD Adds World Models to Its AI Hardware Strategy
World Labs has been developing models capable of generating, reconstructing and simulating interactive 3D environments using text, images and video. Its latest model, Atlas, was introduced in September and is designed to work across text, images, video and 3D data. World Labs says Atlas can reconstruct real-world scenes, generate new camera perspectives and create simulated environments that can be used for robotics.
AMD already sells CPUs, GPUs, networking products and full AI computing systems. In its latest quarterly results, the company reported $11.5 billion in revenue, up 50% year over year, while Data Center revenue rose 107% to $6.7 billion. AMD said demand for EPYC processors and Instinct GPUs drove the increase.
The World Labs acquisition gives AMD an opportunity to better understand the models that could drive future demand for that hardware.
AMD and World Labs had already been working together before the acquisition. AMD said it first invested in World Labs through its Series B financing and later expanded the relationship through technical and go-to-market collaborations. World Labs has been optimizing model training and inference on AMD Instinct GPUs.
The companies' existing relationship therefore reduces some of the separation between AMD's hardware business and World Labs' model development. AMD said the acquisition will help it understand how AI workloads are evolving across reasoning, robotics, simulation and physical AI, with that knowledge potentially influencing future hardware, software and systems roadmaps.
The move comes after AMD stock surpassed a $1 trillion market capitalization earlier in September, reflecting the surge in investor interest surrounding AI infrastructure and semiconductor demand.
Physical AI Expands the Competition Beyond Chatbots
The acquisition also reflects a broader shift in AI research toward systems that can interact with the physical world. Large language models primarily process and generate language, while world models attempt to build representations of environments, including their geometry, movement, and physical relationships.
World Labs says Atlas can support real-to-sim workflows for robotics, allowing physical environments to be reconstructed and simulated for training and evaluating robotic systems. It creates potential applications in robotics, industrial design, scientific simulation and other areas where AI must reason about physical environments rather than text alone.
Li discussed the same direction in a recent Bloomberg interview, explaining that World Labs' models generate and reconstruct 3D and 4D environments and can provide training and evaluation environments for robots. She also said the technology is being explored across creative industries, design, robotics and laboratory applications.
AMD's purchase comes as other major technology companies are investing in similar capabilities. Nvidia has been developing its own world-model technology and working with companies involved in autonomous driving and physical AI, while other startups are building systems for robotics and simulation.
The $8.2 billion price also makes the transaction one of AMD's largest recent AI investments. The deal is entirely stock-based, meaning AMD is using its equity rather than announcing a cash purchase price. World Labs had raised approximately $1 billion earlier in 2026, including investment from AMD, before agreeing to the acquisition.
For AMD, the transaction broadens the AI strategy from supplying computing hardware toward gaining more influence over the models and applications that determine how that hardware is used. The acquisition is expected to close by the end of 2026, after which Li and the World Labs team will become part of AMD. Until then, the financial and operational impact of the transaction remains subject to the closing process.