Meta strikes 'multi-billion dollar' deal with Google to lease AI processors - media outlet

Meta has signed a "multibillion-dollar" multi-year agreement with Google to lease AI chips for the development of new artificial intelligence models, The Information reported , citing a source involved in the negotiations. The reported deal comes amid rising spending by major tech companies on AI infrastructure and chips - to meet the growing demand for AI technology, Reuters specifies.

Financial details of the deal between Meta and Alphabet, as well as its term, the interlocutor of The Information did not disclose. Representatives of Meta and Google declined to comment on the agreement, writes Reuters.

According to The Information, Meta is also in talks with Google to directly purchase Tensor Processing Units (TPUs) for its data centers as early as next year, but the current status of those discussions was not specified, Reuters writes.

Google's tensor processors are highly specialized chips that, unlike general-purpose graphics gas pedals, were originally designed exclusively for the needs of neural networks and accelerating "machine learning workloads". Back in December last year, Reuters noted that Google was betting on its own tensor processors as a competitor to Nvidia's chips. Sales of these chips have become a key driver of revenue growth in Google's cloud business.

In addition, The Information points out that Google has signed an agreement with an unnamed large investment firm to fund a joint venture. The companies expect that this entity will be in the business of leasing TPUs from Google to other customers.

Meta is actively diversifying its processor suppliers in order not to depend on a single player in the semiconductor market, Yahoo Finance points out. Thus, on February 24, Advanced Micro Devices (AMD) announced that it will sell Meta chips for AI worth up to $60 billion. The first graphics processors from AMD will be integrated into the infrastructure of Meta's data centers in the second half of this year. In addition, on February 17, Meta signed a contract with Nvidia to buy current and future models of its AI processors.

In total, Meta plans to spend more than $135 billion during 2026 on AI infrastructure, Yahoo Finance notes. According to Reuters, the capital expenditures of the four giants (Alphabet, Microsoft, Amazon and Meta) this year will amount to at least $630 billion, most of which will be spent on data centers and chips.

Securities Meta and Alphabet on the premarket on February 27, slightly declining (by 0.7% and 0.2%, respectively). Since the beginning of the year amid investor concerns that the multi-billion dollar expenditures of bigtechs on AI may not justify themselves, quotes of Meta rose by about 1%, Alphabet - fell by 2.5%.

Nevertheless, most Wall Street analysts are positive about the prospects of both companies - none of them recommends "selling" Meta and Alphabet shares, according to MarketWatch data. 66 analysts who track Meta's securities advise buying them, and another six advise holding them. On Google similar dynamics: 65 analysts advise to buy the company's securities, 10 - to hold.

This article was AI-translated and verified by a human editor