Nvidia Shares Fall Sharply Amid Talks Of Meta Mulling Use Of Google Chips

Shares of Nvidia Corp. plunged nearly 7% during early trade on Tuesday following reports that Facebook parent Meta Platforms Inc. is considering using chips designed by Google.

The slide put the stock on track for its biggest monthly decline since the market rout of 2022. The share price has fallen about 15% month to date.

Google-parent Alphabet Inc. gained as much as 2.6% higher, after a more than 6% rally on Monday.

The Information reported that Meta is considering using Google's tensor processing units (TPUs) in its data centers in 2027. Meta may also rent TPUs from Google's cloud unit next year, the publication reported.

Google launched its first-generation TPU in 2018 and it was initially designed for its own internal use for its cloud computing business. Since then, Google has launched more advanced versions of its chip that are designed to handle artificial intelligence workloads. The company released its 7th generation TPU, Ironwood, this month.

A Google-Meta deal would help establish TPUs as an alternative to Nvidia's chips, the gold standard for big tech firms and startups from Meta to OpenAI that need computing power to develop and run artificial intelligence platforms.

Graphics processing units (GPUs), dominated by Nvidia, were initially designed to accelerate graphics rendering, particularly for video games and visual effects. However, their ability to handle large data sets and computations made them ideal for training AI models.

In contrast, TPUs are specialised microchips, known as application-specific integrated circuits, designed specifically for a particular purpose.

Last month, Google signed a deal with Anthropic PBC to supply up to 1 million of its specialised AI chips in a deal worth tens of billions of dollars.

Meta's capex of at least $100 billion for 2026 suggests it will spend at least $40-$50 billion on inferencing-chip capacity next year, as per a Bloomberg report.