Analyst Reassesses Nvidia Stock After Google-Meta Chip Deal

Nov 30, 2025, 7:15 PM

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Nvidia (NVDA) shares experienced notable volatility this week after reports emerged that Meta (META) is negotiating to purchase billions of dollars worth of Google (GOOG) chips starting in 2027. This development could position Alphabet as a direct competitor in the data center processor market, an area where Nvidia currently holds a leading position.

Meta is reportedly considering integrating Google's tensor processing units (TPUs) into its own data centers and may begin renting Google Cloud chips as early as next year. This shift marks a significant change in Google's strategy, which has historically kept TPUs within its own facilities, and could greatly expand the addressable market for its chips.

Following the announcement, Nvidia's shares fell approximately 2.59% on November 25, while Alphabet's stock rose by 1.53%. Both Google and Meta are among Nvidia's largest customers, with plans to invest billions in AI infrastructure, making this news particularly impactful for Nvidia.

Despite the stock's recent dip, Nvidia has seen a year-to-date increase of about 34%. The company recently reported fiscal third-quarter results that exceeded Wall Street's expectations, with adjusted earnings of $1.30 per share and revenue of $57.01 billion, surpassing estimates of $54.92 billion.

Nvidia CEO Jensen Huang has dismissed concerns about an "AI bubble," asserting that the current technological shifts signify a substantial transformation rather than a fleeting trend. He highlighted three major dynamics: the transition from CPUs to GPU-accelerated systems, the maturation of AI applications, and the emergence of "agentic AI systems" capable of reasoning and planning.

Wedbush analyst Dan Ives remains bullish on Nvidia, asserting that the company will continue to lead the AI revolution despite increased competition. He emphasized that the current market pressure is likely a temporary phase, predicting a rally for tech stocks as investors seek to capitalize on the ongoing AI advancements.

Ives characterized the current moment as akin to "1996," suggesting that while there may be competition, Nvidia's foundational role in the AI sector remains unchallenged for the foreseeable future. He believes that substantial spending from tech hyperscalers will fuel Nvidia's growth into 2026.

Meanwhile, Meta's own stock faced challenges following its third-quarter earnings report, which indicated a significant increase in investment spending plans for 2026. Despite achieving its fastest sales growth since early last year, the company's commitment to heavy AI investments raised concerns among investors, leading to a sharp decline in its stock price.

Meta's Chief Financial Officer Susan Li indicated that the company expects capital expenditures to grow significantly in 2026, with projections nearly doubling from 2024. This aggressive spending strategy has drawn comparisons to the company's previous investments in the metaverse, which had not yielded immediate returns.

Zuckerberg's ambition to establish Meta as a leading "frontier AI lab" has led to increased scrutiny from analysts, with some expressing skepticism about the potential return on investment for such initiatives. The uncertainty surrounding the timeline for achieving superintelligence has further complicated the outlook for Meta's stock.

Despite these challenges, analysts like Bernstein's Mark Shmulik noted that AI is already driving a considerable portion of Meta's revenue, particularly in advertising. However, the long-term financial implications of Meta's AI investments remain uncertain, leading to a cautious stance among investors.

In summary, while Nvidia's stock faces immediate pressure from the competitive landscape shaped by Meta and Google, analysts maintain a positive outlook on its long-term prospects due to the ongoing demand for AI infrastructure. As the tech sector continues to evolve, Nvidia's foundational role in the AI revolution is expected to endure.

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