(Bloomberg) — Nvidia Corp.’s stock slid after the Information reported that Meta Platforms Inc. was in talks to spend billions on Google’s AI chips, suggesting the internet search leader is making headway in efforts to create a rival to the industry’s bestselling AI accelerator.

Meta is in discussions to use the chips — known as tensor processing units, or TPUs — in data centers in 2027, according to the Information, which cited an unidentified person familiar with the talks. Meta also may rent chips from Google’s cloud division next year, the news outlet said.

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Shares of Alphabet Inc., Google’s owner, gained as much as 2.7% in late trading, while Nvidia slumped 2.7% at one point.

An agreement would help establish TPUs as an alternative to Nvidia’s chips, the gold standard for big tech firms and startups from Meta to OpenAI that need computing power to develop and run artificial intelligence platforms. Google previously sealed a deal to supply up to 1 million of the chips to Anthropic PBC. Still, Nvidia remains dominant in the market.

After the Anthropic deal was announced, Seaport analyst Jay Goldberg called it a “really powerful validation” for TPUs. “A lot of people were already thinking about it, and a lot more people are probably thinking about it now,” he said.

Representatives for Meta declined to comment, while Google didn’t immediately respond to requests.

What Bloomberg Intelligence Says

Meta’s likely use of Google’s TPUs, which are already used by Anthropic, shows third-party providers of large language models are likely to leverage Google as a secondary supplier of accelerator chips for inferencing in the near term. Meta’s capex of at least $100 billion for 2026 suggests it will spend at least $40-$50 billion on inferencing-chip capacity next year, we calculate. Consumption and backlog growth for Google Cloud might accelerate vs. other hyperscalers and neo-cloud peers due to demand from enterprise customers that want to consume TPUs and Gemini LLMs on Google Cloud.

– Mandeep Singh and Robert Biggar, analysts

Click here for the research.

Asian stocks related to Alphabet surged in early Tuesday trading in Asia. In South Korea, IsuPetasys Co., which supplies multilayered boards to Alphabet, surged 18% to a new intraday record. In Taiwan, MediaTek Inc. shares rose almost 5%.