Meta announced it is in talks to spend billions on Google Cloud’s custom TPUs for its data‑center infrastructure, potentially shifting a large portion of its AI chip spend away from Nvidia. The talks could lead to Meta renting TPUs as early as 2026 and deploying them in its own data centers by 2027.
Meta has already invested heavily in AI, reporting Q3 2025 revenue of $51.24 billion and capital expenditures of $19.37 billion, with a full‑year capex outlook of $70‑$72 billion. The company’s willingness to allocate billions to TPUs reflects its strategy to secure cost‑effective, high‑performance hardware for its expanding AI workloads.
Nvidia, which dominated the AI chip market with over 80 % share of training and inference workloads, reported record Q3 2025 revenue of $57.0 billion and data‑center revenue of $51.2 billion. Despite a 22 % revenue increase and strong gross margins, the prospect of Meta switching suppliers has raised concerns about future pricing power and market share.
Google’s TPUs, especially the latest Ironwood generation, offer a systolic‑array architecture that delivers higher performance per watt for matrix‑heavy AI tasks. By offering on‑premises TPUs, Google is directly challenging Nvidia’s sales model and could capture up to 10 % of Nvidia’s annual revenue, according to Google Cloud executives.
The announcement has already influenced market sentiment: Nvidia’s shares fell, while Alphabet’s shares rose, reflecting investors’ view that Google’s expanded TPU offering could erode Nvidia’s dominance. Analysts note that the shift signals a broader trend of hyperscalers diversifying their AI hardware supply chains.
If Meta proceeds with the deal, it could accelerate the adoption of TPUs across the industry, prompting Nvidia to further innovate or adjust pricing. The move also underscores the importance of hardware flexibility for AI leaders and may reshape the competitive landscape in the coming years.
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