Google's TPUs Threaten Nvidia's Dominance as Meta Considers Transition

According to sources at Bloomberg, the AI sector has seen a surprising turn following reports of Meta's consideration to use Google's Tensor Processing Units (TPUs) instead of Nvidia's Graphics Processing Units (GPUs) starting in 2027, in a deal worth billions. The news caused Nvidia's shares to drop by more than 4%, while Alphabet's shares surged by over 4%. Anthropic secured a massive deal to acquire one million TPUs worth tens of billions, while Apple pays Google $1 billion annually for an AI model with 1.2 trillion parameters to enhance Siri. Estimates indicate that TPUs offer a 40-50% cost advantage compared to Nvidia's H100 GPUs, along with 2.9 times better energy efficiency, representing a real threat to Nvidia's decade-long monopoly in the AI market.

In this context, Nvidia confirmed on Tuesday that its technology remains a full generation ahead of competitors in response to Wall Street concerns about Google's AI TPU chips threatening its dominance. These statements followed a 4% drop in Nvidia's shares, marking the worst monthly performance since September 2022, with a 15% loss so far in November. In contrast, Alphabet's shares jumped more than 5% on Monday and continued to rise 3.85% on Tuesday, welcomed by the launch of the Gemini 3 AI platform. Markets are awaiting earnings results from Dell Technologies, HP Inc., and Autodesk today, which will provide insights into demand for AI-powered servers and computers for the holiday season.