Nvidia shares sharply declined up to 5% on Tuesday following reports of possible collaboration between Google and Meta for a multibillion-dollar AI chip.
As reported by The Information, discussions between the Alphabet-owned Google and Meta are currently underway for a multibillion-dollar deal to supply its tensor processing units (TPUs) for Meta’s data centers by 2027.
It would mark a significant shift from the company’s current model, where it rents TPU access through Google Cloud instead of selling the chips directly.
The report further suggested that Google is pitching TPUs to other cloud customers, a major move that could exponentially raise up to 10% of Nvidia’s annual revenue.
AMD shares further dropped over 8% after receiving the news.
Big Tech companies including Google, Amazon, and Microsoft are rapidly designing their own AI chips, aiming to outdo Nvidia.
Recently, Amazon rented out 500,000 of its customised chips to AI company Anthropic, while Google has struck multiple collaborations with the leading industry players.
Several reports have been circulating for months that Google is preparing to expand its chip business. DA Davidson previously predicted Google’s TPU business and DeepMind could be worth up to $900 billion.
Nvidia’s decline erased gains from Monday due to increasing concerns regarding AI on tech stock. The company recently hit back against massive backlash of “circular” AI investments, insisting its financial reporting is transparent.