NVIDIA Stock Drops as Meta Considers Buying Google’s AI Chips

NVIDIA Corporation shares fell sharply in premarket trading on Tuesday, November 25, 2025, following reports that Meta Platforms is in discussions to purchase billions of dollars worth of Google’s tensor processing units (TPUs). The news suggests Google is making significant progress in challenging NVIDIA’s dominant position in the AI chip market.

Trading at $175.90 in premarket, down $6.65 or 3.64% from the previous close of $182.55, NVIDIA’s stock decline reflects investor concerns about potential competition from Google’s specialized AI accelerators.

Meta’s Interest in TPUs Signals Rising Competition for NVIDIA

According to The Information, Meta Platforms is in talks to deploy Google’s tensor processing units in its data centers starting in 2027, with the possibility of renting TPUs from Google’s cloud division as early as next year. This would represent a significant validation of Google’s TPU technology, which has been designed specifically for AI workloads since its first-generation launch in 2018.

An agreement with Meta, one of the world’s largest spenders on AI infrastructure with projected capital expenditure of $70-72 billion this year, would establish TPUs as a credible alternative to NVIDIA’s market-leading GPUs.

The potential deal highlights the broader industry trend of companies seeking to diversify their chip supply and reduce dependence on NVIDIA, whose graphics processing units have become the gold standard for AI development.

Google’s TPUs offer customization advantages as application-specific integrated circuits designed for discrete purposes, contrasting with NVIDIA’s GPUs that were originally created for graphics rendering but proved well-suited for AI tasks.

Bloomberg Intelligence analysts estimate Meta could spend $40-50 billion on inferencing chip capacity in 2026 alone, suggesting substantial opportunity for alternative chip providers.

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Market Reacts as Google Gains Ground in AI Chip Race

While NVIDIA maintains its dominant market position with a $4.437 trillion market cap and impressive performance metrics including a PE ratio of 45.30 and year-to-date returns of approximately 36%, the Google-Meta news triggered immediate market reactions.

Alphabet shares surged over 6% on Monday and climbed an additional 2.4% in premarket trading Tuesday, while Broadcom, which helps Google design its TPUs, jumped 11% Monday and rose another 2% in premarket. The stock movements reflect investor recognition that Google’s progress could reshape competitive dynamics in the AI semiconductor market.

Despite the competitive threat, NVIDIA’s fundamentals remain strong with Q3 fiscal 2026 revenue of $57.01 billion and earnings of $31.77 billion, demonstrating the company’s continued ability to capitalize on AI infrastructure buildout. Analyst price targets range from $140 to $352, with an average of $248.42, suggesting confidence in NVIDIA’s long-term prospects.

However, the emergence of viable alternatives like Google’s TPUs introduces new uncertainty around NVIDIA’s ability to maintain its current market dominance, particularly as major customers seek supply diversification and cost optimization in their multi-billion dollar AI investments.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.