Quick overview

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Nvidia declined after a report indicated that Meta is in talks to spend billions on Google’s AI chips. This suggests that the internet search giant is making progress in efforts to compete with industry leaders in AI acceleration.

Meta is negotiating to use Google’s tensor processing units, or TPUs, in data centers in 2027, according to The Information, which cited an anonymous source familiar with the discussions.

Meta may also rent chips from Google’s cloud division next year, the report added.
An agreement would position TPUs as an alternative to Nvidia’s chips, which are considered the gold standard among big tech companies and startups like Meta and OpenAI for AI platform development and deployment.
Nvidia’s shares dropped as much as 2.7% in after-hours trading, while Google’s parent company, Alphabet Inc., rose by 2.7%, continuing a recent rally driven by optimism over its latest Gemini AI model.
Google previously signed a deal to supply up to 1 million chips to Anthropic PBC, highlighting potential long-term challenges to Nvidia’s traditional market dominance.
Following the Anthropic deal, Seaport analyst Jay Goldberg described it as a “really powerful validation” for TPUs. “A lot of people were already thinking about it, and a lot more are probably thinking about it now,” he stated.
Third-party providers of large language models are likely to use Google as a secondary supplier for inference chips, as evidenced by Meta’s probable use of Google’s TPUs, which Anthropic already employs. We estimate that Meta will spend at least $40–50 billion on inference chip capacity next year, based on its projected capital expenditures of at least $100 billion for 2026.

Growth in Google Cloud’s consumption and backlog may accelerate further. Owing to demand from corporate clients wishing to use TPUs and Gemini LLMs on Google Cloud, other hyperscalers and neo-cloud competitors experienced a surge in Alphabet-related Asian stocks early Tuesday trading.

IsuPetasys Co. in South Korea, which supplies Alphabet with multilayered boards, saw an 18% rise to reach a new intraday high. In Taiwan, MediaTek Inc. shares increased by nearly 5%. A deal with Meta, one of the largest global investors in data centers and AI development, would benefit Google