Alphabet shares dropped after Nvidia unveiled a $500 billion financing partnership with six Wall Street institutions, a deal analysts say makes Nvidia's GPUs cheaper to finance than Google's custom AI chips. The pressure compounds existing doubts about Alphabet's AI strategy, including delays to its next Gemini model and turnover at DeepMind.
Alphabet slides as analysts flag custom-chip risk
Alphabet shares fell 4% on Monday, after Nvidia unveiled a $500 billion financing partnership with major Wall Street firms. Shares were down another 0.3% in Tuesday's trading. According to Jefferies analyst Jeffrey Favuzza, the deal is a net negative for custom ASICs such as Google's tensor processing units: "net negative for custom ASICs".
Nvidia turns GPUs into a financeable asset class
Nvidia's partnerships with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR were announced on August 10. The deal aims to mobilize over $500 billion of third-party capital for AI infrastructure. Nvidia also signaled it may backstop up to 25% of certain financing arrangements under the framework, a structure MarketWatch reports could make custom silicon options less attractive to customers by comparison. However, the pacts are memorandums of understanding rather than finalized contracts, and the gap between signing and deploying $500 billion in actual capital remains significant.
Google's TPU bet faces new headwinds
Google's tensor processing units underpin compute deals with Anthropic and SpaceX, and the company began selling its chips to third parties this year. But GPUs are proving more durable than expected: on CoreWeave's Tuesday earnings call, the company said it had signed a contract for Nvidia's A100 GPUs that extends to 2029, showing a nearly 10-year chip lifespan well beyond the five-year depreciation schedule many had assumed.
Recent departures and leadership shake-ups in Google's DeepMind division have added further uncertainty to the company's AI strategy. Its next Gemini 3.5 Pro model, originally slated for a June launch, has yet to ship. Alphabet isn't alone in facing this dynamic, either: Amazon and Microsoft, which have also invested in custom silicon, face a more competitive landscape if Nvidia's financing model speeds up broader GPU access, according to Crypto Briefing.
Sources: MarketWatch, Crypto Briefing
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