Meta explores AI chip partnership
Meta Platforms is discussing a major purchase of Google’s tensor processing units, or TPUs, for its data centers starting in 2027. Sources told The Information that the deal could be worth billions of dollars. Meta may also rent Google Cloud chips next year. The discussions are part of Google’s plan to get more companies to use its TPUs for AI workloads. Currently, Google uses TPUs only in its own data centers. Allowing outside companies to buy or rent them would open a bigger market. Analysts say this could help Google take a share of the money spent on AI processors, now dominated by Nvidia. Google executives have suggested this strategy could bring in up to 10% of Nvidia’s annual revenue.
Market reaction and stock movements
The report of the talks affected markets quickly. Alphabet shares rose more than 4% in premarket trading, putting it on track toward a $4 trillion valuation if gains hold. Broadcom, which helps Google make AI chips, gained about 2%. Nvidia shares fell more than 3%, as investors weighed the potential impact of Google gaining a large AI chip customer. A deal with Meta would be a major win for Google. Meta is one of Nvidia’s largest customers and plans up to $72 billion in AI spending this year. Google has also gained from the AI boom through its cloud services and new interest from investors such as Berkshire Hathaway. Its latest AI model, Gemini 3, has received strong early reviews, boosting confidence in Google’s AI strategy.
Growing competition in AI hardware
Demand for AI chips has grown quickly. Many companies are looking for alternatives to Nvidia’s expensive and limited processors. Google’s TPUs are increasingly seen as a viable option. Last month, Anthropic expanded its Google chip deal to use up to one million units. However, Nvidia still has an advantage. Its CUDA platform has been in development for nearly 20 years and is used by more than four million developers. Google will need to overcome this established ecosystem to compete effectively in AI chip sales. Meta, Google, and Nvidia did not respond to Reuters’ requests for comment.
