Meta's Potential Shift to Google TPUs Sparks Nvidia Stock Decline

Shares of Nvidia fell sharply on Tuesday after a report from The Information indicated that Meta Platforms is in advanced discussions to adopt Google's tensor processing units (TPUs) for its data-center infrastructure. Nvidia's stock dropped 3.58% in premarket trading, while Alphabet, Google's parent company, saw its shares rise more than 4% following the news.

The report revealed that Meta is considering integrating Google's TPUs into its data centers starting in 2027, with potential plans to rent TPUs from Google Cloud as early as next year. This move marks a significant departure from Google's historical strategy of deploying TPUs exclusively in its own data centers. Google first launched TPUs in 2018 and has since evolved them into highly specialized chips for artificial intelligence workloads, offering potential efficiency advantages for large-scale AI inferencing and training.

Google Cloud executives have argued that supplying TPUs directly to customers could help capture up to 10% of Nvidia's annual revenue, representing a multi-billion-dollar opportunity in the booming AI semiconductor market. This competition intensifies as global spending on AI-ready data centers reaches hundreds of billions of dollars. Analyst Jay Goldberg of Seaport described a recent Google deal to supply up to one million TPUs to Anthropic as a "really powerful validation" of Google's chip strategy, noting increased enterprise interest in TPUs as an alternative to Nvidia hardware.

Meta, one of the world's largest spenders on AI infrastructure, has projected capital expenditure of $70–72 billion this year and at least $100 billion in 2026. Analysts estimate Meta could spend $40–50 billion next year alone on inferencing-chip capacity, potentially accelerating demand for Google Cloud. Despite Nvidia's dominant position in AI hardware, with its GPUs underpinning most major AI buildouts, the company faces growing pressure as firms like Meta seek to diversify their chip supply chains.

Additional market reactions included surges in Asian stocks, such as IsuPetasys in South Korea (up 18%) and MediaTek in Taiwan (gaining nearly 5%), reflecting optimism around Google's expanding chip ecosystem. The news coincided with criticism of Nvidia from investor Michael Burry, who reiterated concerns about the company's stock-based compensation and buybacks, though Nvidia has addressed these claims in analyst memos.