Meta Platforms is in advanced discussions with Google to buy Alphabet’s AI chips to use in its data centers starting in 2027. According to The Information, the multi-billion-dollar deal may potentially reshape the competitive semiconductor market dominated by NVIDIA.
As part of the long-term purchase plan, Meta is considering renting Google Cloud’s tensor processing units as early as next year. This would be a significant shift for Google as the company had limited the usage of its TPUs largely to its own data centers until recently.
If Google allows customers outside the company to use its TPUs, it can gain an annual market share of up to 10% from NVIDIA, earning billions of dollars. Meta, one of the largest customers of NVIDIA chips, is expected to spend up to $72 billion on chips this year, making it a valuable customer.
The deal would fortify Google Cloud’s position in the AI infrastructure market amid surging demand. Alphabet shares jumped more than 4% during Wednesday’s premarket trading, while NVIDIA dipped 3.2%. Broadcom also rose because of its key status as a chip manufacturing partner with Google.
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NVIDIA’s software platform is deep-seated in the AI field, with over 4 million developers using CUDA. In that case, having such entrenched software also serves as a barrier.
Alphabet, Meta, and NVIDIA all declined to comment on the talks, but the prospective deal serves as yet another indication of growing competition in the AI chip market as demand for alternatives to NVIDIA’s expensive and supply-constrained GPUs increases.