Meta Negotiates Multi-Billion-Dollar Deal for Google’s AI Chips

According to news sources, Meta Platforms is looking into a long-term agreement with Google to purchase billions of dollars' worth of AI processors beginning in 2027. The talks could drastically change the power dynamics in the fiercely competitive AI semiconductor market, including the potential for Meta to rent Google Cloud's tensor processing units (TPUs) as early as next year. 

The discussions are a part of Google's larger initiative to convince clients to use its custom TPUs chips for AI workloads in both Google data centres and the clients' own facilities. This would be a significant change from Google's current strategy of relying solely on TPUs in its infrastructure. If the plan is successful, it may increase the market for Google's AI technology and put the company in direct competition with Nvidia for a bigger portion of the quickly expanding data centre CPU industry.

The Strategy May Help Google in Enhancing Revenue

The report claims that some Google Cloud executives have indicated that the plan might enable the company to acquire up to 10% of Nvidia's yearly revenue, or billions of dollars. In premarket trading, Alphabet's stock increased by over 3%, bringing the corporation within $20 billion of a $4 trillion valuation.

Nvidia dropped 3.2%, while Broadcom, which assists Google in producing its AI chips, increased 2%. It would be a huge win for Google, which is already one of the biggest beneficiaries of the generative AI boom due to a spike in demand for its cloud services from companies implementing the technology, to land a chip deal with Meta, one of the largest Nvidia customers with up to $72 billion in spending planned this year.

Google to Capitalise Over Nvidia’s Pricey Processors

As companies search for alternatives to Nvidia's expensive and limited supply of graphics processors, demand for customised devices like TPUs has increased recently. Last month, Anthropic announced that it was extending its agreement with Google to utilise up to one million of the tens of billions of dollars' worth of AI processors from the internet giant.

In recent months, Google has gained momentum by attracting Berkshire Hathaway, an investment from Warren Buffett, transforming its once-marginal cloud division into a growth engine, and receiving positive early reviews for its most recent Gemini 3 model. One of its main sources of income is the rental of Nvidia chips to clients. Google would need to overcome over two decades of proprietary Nvidia code, which has made the company's ecosystem difficult to dislodge, in order to challenge Nvidia's dominance. Nvidia's CUDA software platform is used by over 4 million developers globally to create AI and other applications.