Meta Platforms is reportedly in talks to purchase Google’s custom Tensor Processing Unit (TPU) chips for AI, causing shares of AI chip suppliers Nvidia and AMD to drop. Google’s TPUs are gaining traction, possibly prompting Meta to rely on Google for ASICs rather than develop its own chips. The market share of chips from Nvidia, AMD, and ASICs remains uncertain, dependent on future innovation and execution. Despite potential risks, Nvidia and AMD’s fair value estimates remain stable. Nvidia may lose market share to ASICs but should maintain dominance in AI software and networking. The impact on AMD is more concerning as it strives to prove its AI capabilities to hyperscalers, although Meta’s potential shift to TPUs may not spell doom for the Meta-AMD partnership.

Read more at Morningstar: Nvidia and AMD: Maintain Fair Value Estimate Amid Reports of Meta’s Negotiations to Buy Google TPUs