Meta Platforms Inc (NASDAQ:META, XETRA:FB2A, SIX:FB) is in talks with Alphabet Inc (NASDAQ:GOOG)’s Google to spend billions of dollars on Google’s custom AI chips called tensor processing units (TPUs) in its data centers starting in 2027, according to a report from The Information.
Meta currently relies on Nvidia chips but may begin renting TPUs from Google Cloud as early as 2026 to test the technology before broader deployment, per the report.
Google has promoted TPUs as an alternative to Nvidia Corp (NASDAQ:NVDA, XETRA:NVD) GPUs for AI workloads and is expanding sales beyond its own cloud operations.
Since launching its first-generation TPU in 2018 for internal use, Google has rolled out more advanced versions to handle complex AI tasks. If Meta adopts TPUs, it could serve as a major endorsement for Google’s AI hardware and mark a new phase of competition in the AI chip market.
“Google Cloud is experiencing accelerating demand for both our custom TPUs and Nvidia GPUs; we are committed to supporting both, as we have for years,” a Google spokesperson said in a statement to CNBC.
Analysts at Wedbush expressed doubts about this partnership coming about. They pointed to competition between Meta and Google, which could move to the device level, and Meta’s work on its own ASIC-based processors and presumed interest in next-generation AMD parts. However, they see the speculation as a positive indicator for the TPU architecture.
“TPU success could be seen as something of a threat for Nvidia, albeit we continue to see market velocity as a larger component for Nvidia's success versus share shift, and we also see Google's reach with TPUs as likely governed by its competition with other large buyers,” they wrote.
They added that while the rise of TPUs could present some headwinds for Advanced Micro Devices Inc (NASDAQ:AMD, XETRA:AMD) if they become a preferred alternative to Nvidia, they expect AMD’s near- to mid-term performance to hinge more on its own execution. Its upcoming agreements, particularly with OpenAI, suggest potential for strong revenue growth if it achieves its technology and production goals.
Shares of Nvidia fell 5.7% to about $172 on the news, and AMD fell 7.7% to $198. Alphabet shares added 0.5% at $320, and Meta shares were up 2.4% at $627.