Nvidia took a notable hit on Tuesday morning. The chipmaker’s stock dropped more than 3% in premarket trading. This slide happened immediately after a report surfaced claiming that Meta might start using AI chips designed by Google. On the flip side, investors like the news for Google, pushing Alphabet’s stock up by over 2%.
The Information broke the story on Monday. According to their report, Meta is seriously considering Google’s Tensor Processing Units (TPUs). The plan could see Meta installing these chips in its own data centers by 2027. Even sooner than that, the social media giant might start renting TPU power through Google’s cloud division next year to help run its massive AI projects.
This represents a significant shift in the semiconductor race. Google introduced its first TPU back in 2018. Originally, the company used them internally for its own cloud business. Over the years, Google engineers upgraded the design specifically to handle complex artificial intelligence workloads. Because these chips are custom-made, experts say they offer high efficiency and speed that generic hardware sometimes lacks. If a massive client like Meta decides to use them, it gives Google’s technology a major stamp of approval.
Nvidia is still the king of the hill, of course. Their GPUs are currently the engine behind almost every major AI system in the world. Nobody expects Nvidia to lose the top spot tomorrow. However, big tech companies are growing nervous about relying on a single supplier for such critical hardware. They want options to keep costs down and maintain distinct supply chains.
Meta is one of the biggest spenders in the game. The company projects it will spend between $70 billion and $72 billion on infrastructure this year alone. If even a portion of that massive budget moves from Nvidia to Google, it creates a new competitive dynamic in the market. Companies are actively searching for ways to diversify, and Google is stepping up to offer that alternative. For now, Wall Street is watching closely to see if this potential partnership becomes a reality.
