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Investing.com -- Google is sharply escalating its bid to rival Nvidia in the AI chip race, and Meta is emerging as a potential multibillion-dollar customer, The Information reported Monday evening.
For years, Google has limited its custom tensor processing units (TPUs) to its own cloud data centers, renting them out to companies running large-scale AI workloads. But according to The Information, Google is now pitching the chips for deployment inside customers’ own data centers, marking a major shift in strategy.
One of those customers is Meta Platforms Inc (NASDAQ:META). The parent of Facebook and Instagram is reportedly in discussions to spend billions of dollars to integrate Google’s TPUs into its data centers starting in 2027, while also planning to rent TPU capacity from Google Cloud as early as next year. Meta currently relies primarily on Nvidia GPUs for its AI infrastructure.
Alphabet Inc (NASDAQ:GOOGL) stock rose 2.1% in after-hours trading following the announcement, while NVIDIA Corporation (NASDAQ:NVDA) stock slumped 1.8%
If the deal proceeds, it would be a significant validation for Google’s hardware ambitions. The company has told prospective clients—ranging from high-frequency trading firms to large financial institutions, that installing TPUs on-premises can help them meet stringent security and compliance requirements for sensitive data, The Information reports.
The stakes are enormous. Executives inside Google Cloud have suggested that expanding TPU adoption could help the company capture up to 10% of Nvidia’s annual revenue, a haul worth billions.
With demand for AI compute exploding and Nvidia continuing to dominate the supply chain, Google’s play to put TPUs directly into customers’ facilities signals a more aggressive phase in the AI chip wars.