This article first appeared on GuruFocus.

Alphabet (NASDAQ:GOOGL) shares rose about 2%, hitting a second all-time high at $326 on Tuesday morning, after The Information reported Meta (NASDAQ:META) is in talks to buy and rent Google’s AI accelerator chips, known as TPUs, for its data centers, a person familiar with the matter said.

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The potential deal would see Meta commit billions to secure TPU capacity and rent additional TPU instances from Google Cloud, boosting cloud revenue and validating Google’s chip strategy.

Investors interpreted the report as confirmation that demand for specialized AI hardware is accelerating, which could lift margins in Google Cloud and expand Alphabet’s addressable market beyond advertising.

Alphabet’s valuation nears $4 trillion on optimism over its AI leadership, robust ad sales, and rapid Google Cloud growth; TPUs and related services are viewed as catalysts that could sustain higher revenue multiples.

Market sentiment has leaned bullish as Wall Street prices in stronger enterprise AI spending and recurring cloud rentals, prompting the stock’s climb.