Meta’s Shift Toward Google AI Chips Signals Rising Competition

Nvidia (NVDA) dropped 3% in premarket trading Tuesday following a report that Meta Platforms (META) is exploring a major shift in its AI chip strategy. According to The Information, Meta is in discussions to spend billions on Google’s (GOOGL) tensor processing units (TPUs) for deployment in its data centers starting in 2027.

Potential Long-Term Partnership with Google Cloud

Meta is evaluating Google’s TPUs as a scalable alternative to Nvidia’s industry-leading GPUs.
The company may also rent Google Cloud chips as early as 2026, accelerating its testing and integration timeline.
Any agreement would deepen Meta’s growing reliance on diversified AI infrastructure and reduce overdependence on one supplier.

A Direct Competitive Threat to Nvidia and AMD

A Meta–Google deal would position TPUs as a major rival to Nvidia’s top-tier AI chips.
Analysts note that such a move could pressure Nvidia’s and AMD’s pricing power and chip sales over time.
The report triggered a sell-off in AI semiconductor names:
- Nvidia fell ~3% premarket
- AMD declined ~2.4%

Alphabet Shares Rise on AI Momentum

Alphabet (GOOGL) gained 2.7%, extending recent momentum fueled by optimism around the newest Gemini AI model and growing enterprise demand for Google Cloud’s accelerator chips.