Justin Sullivan
A sign is posted in front of the Advanced Micro Devices (AMD) headquarters in Santa Clara, California.

US chip stocks surged on Monday (September 21), with AMD (Nasdaq: AMD) hitting an intraday record high of more than US$613. Its market value briefly topped US$1 trillion, making it the fourth US chipmaker to cross that threshold after Nvidia (Nasdaq: NVDA), Broadcom (Nasdaq: AVGO) and Micron Technology (Nasdaq: MU).

AMD was not the biggest gainer of the day, however. Intel (Nasdaq: INTC) rose as much as 14%, making it the best-performing S&P 500 constituent of the day, while Arm (Nasdaq: ARM) climbed as much as 17%. AMD gained as much as about 10%. The Philadelphia Semiconductor Index rose about 3.9%, extending its winning streak to five trading sessions.

The rally was not triggered by an announcement from any chipmaker, but by Meta Platforms’ (Nasdaq: META) AI agent Muse, launched on September 8. About 10 days after its release, the app rose to the top of the US iPhone free-app chart. Citing Sensor Tower data, Barron’s reported that Muse had been the most-downloaded free iPhone app in the US for three consecutive days. Meta shares rose about 11% at one point on Monday. Muse is currently available only in the US, and users must be at least 18 years old.

Why are CPU stocks rising?

Muse is more than a chatbot. It can send emails, arrange appointments, shop online and fill in forms on behalf of users. Meta said each Muse session runs on a dedicated cloud-based virtual machine, the Muse Secure VM, with its own browser, processor, memory and storage. It can continue working after users close the app.

Analysts say CPUs are primarily responsible for opening browsers, running programmes and co-ordinating tools, while most of the computing involved in model inference is still handled by GPUs. The market is therefore reassessing demand for CPUs. This also explains why the gains have been concentrated in Intel, Arm and AMD, while the semiconductor index has risen by significantly less.

AMD itself is bullish on the trend. In July, it raised its estimate for the server CPU market in 2030 from US$120 billion to US$220 billion, equivalent to a compound annual growth rate of about 50%. Arm’s forecast is about US$120 billion in 2030, representing annual growth of more than 35%. Both figures are companies’ own forecasts rather than estimates from independent organisations. AMD expects server CPU revenue to grow by more than 80% year on year in the second half of this year, followed by growth of more than 70% in 2027.

AMD’s actual relationship with Meta

On February 24, AMD and Meta announced a partnership under which Meta could deploy up to 6 gigawatts (GW) of AMD Instinct GPUs. The first 1GW will use customised GPUs based on the MI450 architecture and sixth-generation EPYC CPUs, with shipments expected to begin in the second half of 2026. AMD chief financial officer Jean Hu said each gigawatt would generate tens of billions of dollars in data-centre AI revenue for AMD. By comparison, AMD’s total revenue last year was US$34.6 billion.

The agreement also includes warrants allowing Meta to subscribe for up to 160 million AMD shares at an exercise price of US$0.01 per share, vesting in stages. Conditions include shipment milestones, Meta’s technical and commercial milestones, and AMD’s share price reaching specified thresholds. The highest threshold is US$600 per share. AMD’s intraday share price was already above that level on Monday, but vesting remains subject to shipment and purchasing progress.

As for the MI450 timetable, AMD said at its August results briefing that mass-production shipments would begin towards the end of the third quarter, increase “very significantly” in the fourth quarter and continue growing through 2027. AMD also acknowledged that deploying its rack-scale Helios system involved supply-chain and manufacturing complexity.

Monetisation and costs remain unclear

Muse has a free version and two paid plans: Power at US$20 a month and Maximum at US$100 a month. Meta expects most users to remain on the free version. Morgan Stanley believes Meta could eventually charge commissions on transactions facilitated by Muse. Whether users will be willing to pay for AI agents remains to be tested by the data.

Meta has not disclosed how much computing capacity Muse requires to maintain a virtual machine in the cloud for each user. Meta’s capital expenditure guidance for this year is US$130 billion to US$145 billion, but that covers its overall AI and data-centre investment rather than Muse specifically.

On security, Meta said it has an independent Sentinel approval mechanism, with users required to approve payments. However, the launched version does not prevent Meta from accessing data when required for operations or security. A Muse Confidential VM, which would prevent Meta from accessing the data, is planned for release this year. Once an AI agent can make payments automatically, the consequences of a vulnerability would be far more serious than an erroneous chatbot response. Whether regulators will intervene remains to be seen.

Three figures to watch

  1. Meta’s Connect event on September 23 and its subsequent capital expenditure guidance. Goldman Sachs has identified the former as the next potential catalyst, while the latter will indicate the scale of Meta’s investment in AI infrastructure.
  2. Shipment progress for AMD’s MI450 and Helios, as well as its third-quarter data-centre revenue — particularly delivery of the first 1GW to Meta.
  3. Muse’s user numbers, paid conversion rate and whether it will expand beyond the US.