Google is negotiating a multi-billion dollar deal with Meta to supply custom AI chips to Meta's data centers starting in 2027. If finalized, this will mark a major shift in Google's AI infrastructure market strategy, "The Information" reported citing sources.
According to the plan under discussion, Meta will deploy Google's TPU (Tensor Processor) in its own computer room and rent Google Cloud's TPU computing power as soon as next year. Google has previously only provided TPU to external customers through its cloud platform. This time it plans to open up local deployment of customers, which is the first time it has entered the market as an alternative to Nvidia.
Affected by the news, Google's stock price rose again by 2.95% before the market opened on Tuesday; Nvidia fell by nearly 3.25%.
Google is promoting its TPU to more potential enterprise customers, including high-frequency trading institutions and large financial companies, emphasizing that localized deployment can help meet security and compliance requirements. Meta's current AI computing power relies almost entirely on NVIDIA GPUs to provide model inference and generation services for its more than 3 billion daily active users.
Google Cloud executives believe that,If TPU further opens up the market, Google is expected to take at least 10% of Nvidia's tens of billions of dollars in annual revenue.
This potential deal is also seen as a key endorsement of Google’s ten years of TPU investment. The seventh-generation TPU "Ironwood" released this year claims to have four times the performance compared to the previous generation, and nearly 30 times more energy efficiency than the first Cloud TPU in 2018.
In October, Anthropic (Claude's parent company) committed to buying up to 1 million Google TPUs for tens of billions of dollars. The company said TPU's cost-effectiveness and energy efficiency are important factors driving its expanded adoption. TPU chips are designed and manufactured by Google and Broadcom. With the strong performance of Google's AI chip business, Broadcom's stock price rose nearly 10% on Monday and rose another 2.42% in pre-market trading on Tuesday.