This article first appeared on GuruFocus.
Meta Platforms Inc (META, Financials) has signed a multi-billion dollar agreement to rent artificial intelligence chips from Alphabet Inc’s Google, according to a report by The Information.
The multi-year deal will allow Meta to use Google’s Tensor Processing Units to develop advanced AI models. The companies declined to comment on the report.
The agreement comes as major technology firms increase spending on AI infrastructure to meet growing demand. Earlier this week, Advanced Micro Devices Inc said it would sell up to $60 billion in AI chips to Meta. The company has also signed agreements with NVIDIA Corp for current and future AI processors.
Google has been promoting its in-house TPUs as an alternative to Nvidia’s GPUs, positioning them as a driver of cloud revenue growth.
The report said Meta is also in discussions to purchase TPUs directly for its data centers as early as next year.
Investors will likely monitor how expanding chip commitments affect capital spending and long-term returns as AI competition intensifies.
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