Nvidia (NVDA) Claims GPU Dominance Over Google’s AI Chips—Here’s Why It Matters

Nvidia just fired a shot across Silicon Valley’s bow—claiming its GPUs outmuscle Google’s custom AI chips. The trillion-dollar silicon arms race just got hotter.

The Benchmark Smackdown

No vague boasts here: Nvidia’s latest architecture reportedly crushes rival systems on raw throughput. Google’s TPUs? Left chewing CUDA-core dust.

Wall Street’s Greedy Embrace

Analysts are already jacking up price targets—because nothing excites institutional investors like a good old-fashioned monopoly narrative. (Never mind those pesky antitrust lawsuits.)

The Bottom Line

While engineers debate tensor cores, traders are placing bets. And if history’s any guide? The house—aka Jensen Huang—always wins.

TLDR

• Nvidia stock dropped 2.6% Tuesday after reports that Google is negotiating a multibillion-dollar deal with Meta to supply AI chips starting in 2027
• Google reportedly plans to sell its tensor processing units (TPUs) directly to customers, potentially capturing up to 10% of Nvidia’s annual revenue
• Nvidia responded by claiming its technology remains “a generation ahead of the industry” and offers greater flexibility than Google’s custom chips
• Major tech companies including Amazon, Microsoft, and Google have developed their own AI chips, becoming both customers and competitors to Nvidia
• The stock movement reversed gains from Monday as concerns continue about AI market valuations and Nvidia’s dominance

Nvidia shares fell 2.6% on Tuesday following reports that one of its biggest customers might soon become a bigger competitor.

NVIDIA Corporation, NVDA

The Information reported Monday that Google is in talks with Meta about a multibillion-dollar deal. The agreement would see Meta use Google’s tensor processing units in its data centers starting in 2027.

The news marks a potential shift in how Google approaches its chip business. Currently, the company only rents access to its TPUs through Google Cloud. The chips stay in Google’s own data centers.

But the new report suggests Google wants to sell TPUs directly to other companies. Sources told The Information that Google believes it could grab up to 10% of Nvidia’s annual revenue.

Nvidia wasn’t staying quiet about the news. The company posted on X that it remains “a generation ahead of the industry.” It pointed out that its chips can run every AI model and work everywhere computing happens.

The chipmaker also highlighted that its graphics processors offer more flexibility than custom chips like Google’s TPUs. These custom chips, called ASICs, are designed for specific tasks or companies.

The Competition Heats Up

Nvidia controls more than 90% of the AI chip market, according to analysts. But that dominance is facing new pressure from an unexpected place: its own customers.

Amazon recently completed a massive project renting out 500,000 of its custom AI chips to Anthropic. Microsoft has also developed its own processors. Google just released Gemini 3, a well-reviewed AI model that was trained entirely on TPUs instead of Nvidia GPUs.

Advanced Micro Devices, another chip company, saw its stock drop more than 4% on the same news. The market seems worried about what Google’s MOVE could mean for the whole sector.

A Google spokesperson said the company is “experiencing accelerating demand for both our custom TPUs and Nvidia GPUs.” The statement emphasized Google remains committed to supporting both types of chips.

Nvidia Defends Its Position

Nvidia CEO Jensen Huang addressed the growing TPU competition during an earnings call earlier this month. He noted that Google remains a customer for Nvidia’s GPU chips. He also said Gemini can run on Nvidia’s technology.

Huang mentioned he’d been in touch with Demis Hassabis, who runs Google DeepMind. According to Huang, Hassabis texted him to confirm that “scaling laws” in AI development are still working. These laws suggest that using more chips and data creates more powerful AI models.

If scaling laws hold up, Nvidia believes it will see even more demand for its products.

Investment firm DA Davidson published research in September showing “considerable interest” from AI labs in buying Google’s TPUs. The firm estimated Google’s TPU business and DeepMind could be worth $900 billion.

Nvidia has faced other criticism lately too. Investor Michael Burry recently bet against the company, comparing the AI market to the dot-com bubble. Some critics have questioned Nvidia’s investments in its own customers.

The company sent a memo to Wall Street analysts over the weekend defending its practices. Nvidia said it’s “completely transparent” about strategic investments and that its portfolio companies are growing revenues rapidly.

Google is also pitching its cloud customers on purchasing TPUs directly. The Information’s report suggests this could represent a major expansion of Google’s chip sales strategy beyond its current rental model through cloud services.