Nvidia shares plunged 4% Tuesday after reports that Meta is considering ditching the chipmaker's GPUs for Google's custom TPUs in its massive data centers. The market shift highlights growing competition in the $100 billion AI infrastructure space as tech giants seek alternatives to Nvidia's dominance.
Nvidia's stranglehold on AI computing just got its biggest challenge yet. The chip giant's stock tumbled as much as 7% before settling at a 4% loss Tuesday after The Information reported that Meta is seriously considering Google's tensor processing units for its 2027 data center rollout.
The market reaction was swift and brutal. While Nvidia shed $100 billion in market value, Alphabet soared 4.2% on top of Monday's 6% rally. Even Broadcom, which helps design Google's TPUs, jumped over 1% following an 11% surge the previous day.
"Google Cloud is experiencing accelerating demand for both our custom TPUs and NVIDIA GPUs; we are committed to supporting both, as we have for years," a Google spokesperson told CNBC, carefully threading the needle between competition and cooperation.
But the implications run deeper than diplomatic corporate speak. Meta isn't just any customer - it's projecting AI infrastructure spending of $70-72 billion this year alone, making it one of the biggest buyers in the entire semiconductor ecosystem. If Meta switches even a portion of that spending to Google's chips, it validates an alternative to Nvidia's GPU monopoly.
Google launched its first TPU back in 2018, initially for internal cloud operations. The custom silicon approach gives Google a potential edge - these aren't general-purpose chips trying to do everything, but specialized processors built specifically for AI workloads. Industry experts have noted this focus could deliver better efficiency than traditional GPUs for certain AI tasks.
The ripple effects extended beyond just Nvidia. AMD, previously seen as the most credible GPU challenger, dropped 6% as investors realized the competitive landscape just got more crowded. fell 4.2% as chip designers across the board felt the heat.
