Meta Invests Billions in Google TPUs, Putting NVIDIA's Dominance at Risk

Alphabet Inc. (GOOGL) is intensifying its competition with

(NVDA) by planning to sell its proprietary tensor processing units (TPUs) directly to (META), a move that could have a major impact on the AI chip industry . This development, and , represents a significant shift from Google’s usual practice of offering TPUs only through its cloud services. , which has previously depended on GPUs for its AI operations, is in its data centers beginning in 2027.

This prospective agreement,

, signals Google’s intention to broaden the reach of its TPUs beyond its own infrastructure and into the systems of external clients. Leaders at Cloud have of NVIDIA’s yearly AI chip sales—a market worth billions—could be achievable. This goal is with its Gemini 3 AI model, which utilizes TPUs and has shown strong performance in industry benchmarks.

The market has already responded to these developments.

in after-hours trading, while . This move marks a more assertive stage in the AI chip competition, as Google and affordable solution for businesses with strict data regulations. The company has already landed a $1 billion contract with Anthropic PBC and is now .

NVIDIA now faces a dual challenge. It must contend not only with Google’s direct competition, but also with

toward vertical integration. Meta’s move to diversify its chip suppliers follows Amazon’s recent investments in proprietary AI hardware and Microsoft’s collaboration with AMD. At the same time, NVIDIA’s dependence on its Hopper architecture—the company’s leading GPU—could be affected by methods such as CoWoS.

The financial implications are substantial. AI-related capital spending is forecasted to reach $600 billion by 2027, with major players like Alphabet, Meta, and Amazon together issuing nearly $90 billion in bonds this year to finance data center growth. Google’s TPU initiative fits within its overall $3.84 trillion market value and 13.9% revenue growth over three years, while

of the market it is striving to protect.

The impact goes beyond just chip manufacturers.

, Google’s long-standing TPU collaborator, experienced a 10% stock surge on Monday, reflecting investor optimism about their AI prospects. On the other hand, AMD and Intel, which have yet to , are under increasing pressure to innovate.

As the AI sector continues to transform, the contest for leadership in AI accelerators is becoming a test of ecosystem power. Google’s approach to vertical integration—

—underscores the importance of both hardware and platform control in shaping the industry’s future. For now, the agreement between Google and Meta stands as a key milestone, with the competitive landscape as demand for AI continues to soar.