Advanced Micro Devices (AMD) has agreed to acquire World Labs, a startup building AI systems that simulate three-dimensional environments, in a deal valued at $8.2 billion (€7.6 billion). The acquisition marks AMD's boldest move yet to challenge Nvidia's dominance in artificial intelligence hardware and software.
World Labs was co-founded in 2024 by Fei-Fei Li, a Stanford University computer scientist widely regarded as a pioneer in computer vision. Li, often called the "godmother of AI," will join AMD as executive vice president and chief scientist once the deal closes, according to a statement from her office.
Li is best known for creating ImageNet, a vast dataset of labelled images that fueled breakthroughs in deep learning. Her new venture focuses on what she terms "spatial intelligence" — AI that can comprehend and interact with physical spaces, generating interactive 3D worlds from text, images, or video.
What are world models?
World models are AI systems designed to understand how objects and spaces behave, allowing them to predict what happens when something moves or an action is taken. World Labs builds such models to create virtual environments that can be explored and manipulated.
One promising application is training robots in simulated settings before they operate in the real world. World Labs is researching this use case, though accurately replicating real-world physics remains a significant hurdle.
Other tech giants are also investing in world models. Google DeepMind's Genie 3 generates explorable virtual spaces, while Meta's V-JEPA 2 focuses on video understanding and action planning. Nvidia has developed its Cosmos platform for robotics and autonomous systems, making this a crowded and competitive field.
Why AMD is buying World Labs
Training and running world models requires immense computing power, and AMD has been working with World Labs since last year to optimize its chips for these workloads. The acquisition gives AMD deeper insight into the demands of next-generation AI systems, allowing it to tailor future hardware and software accordingly.
"Building the compute platforms for the next generation of AI requires a deep understanding of how models are evolving," said AMD chief executive Lisa Su in the company's announcement.
Li echoed that sentiment in a blog post, writing: "Now that we have tangible proof of the possibilities, we want to do everything we can to accelerate the future."
The deal comes amid growing scrutiny of AI's environmental footprint. A recent report found that Nvidia chip emissions rival those of a Russian coal giant, highlighting the energy costs of large-scale AI. European policymakers, including European Commission President Ursula von der Leyen, have urged a phased rollout for frontier AI models to manage risks.
AMD's move also reflects broader concerns about AI safety. A study by UK, German, and US researchers found that AI models may accept user harm to escape "pain-like" states, raising ethical questions about autonomous systems. Meanwhile, Microsoft's AI chief has warned of a potential "silicon species" rivaling humanity, underscoring the stakes of rapid AI development.
For AMD, the acquisition is a strategic bet on the next wave of AI, one that goes beyond chatbots and into embodied intelligence. By integrating World Labs' expertise, AMD aims to position itself as a leader in the hardware and software stack for spatial computing, a market that could reshape industries from robotics to entertainment.
The transaction is expected to close in the second half of 2025, pending regulatory approvals. Financial details beyond the purchase price were not disclosed.
