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Nvidia shares took a noticeable hit on Tuesday, falling 3% after reports emerged that Meta Platforms, the social media behemoth, might be planning a multi-billion dollar expenditure on custom artificial intelligence chips supplied by rival tech titan, Alphabet. It’s a classic Wall Street drama: one firm’s loss of momentum appears to be another’s gain. Alphabet’s stock, in a pleasingly symmetrical move, jumped 4% on the news, dragging chip designer Broadcom along for the ride.
This is more than just a momentary blip; it signals a potentially dramatic shift in the crucial AI infrastructure market. For months, Nvidia has reigned supreme, the undisputed king of the hill for the powerful GPUs necessary to train and run large language models. But now, it seems, major customers are seriously weighing their options, especially the lure of a competitor’s bespoke silicon.
The Algorithm Wars: Meta Flirts with Alphabet
The development, first reported by The Information, suggests Meta is looking beyond its primary supplier to diversify its significant AI investment. Think of it as an insurance policy. Relying on a single vendor, even a dominant one like Nvidia, creates both a supply chain risk and significant pricing leverage for the seller.
“This move, if confirmed, fundamentally changes the narrative,” said Maya Shen, a Senior Tech Analyst at Equilateral Capital. “It tells the market that Alphabet’s Tensor Processing Units—their TPUs—are truly viable alternatives to Nvidia’s flagship H100s. It’s a headache for Nvidia management, plain and simple, and one they can’t easily dismiss.”
The decision by Meta highlights the growing trend of hyperscalers—Google, Amazon, Microsoft—developing their own in-house AI chips, known as custom silicon, to cut costs and optimize performance for their specific software. While this is certainly a long-term threat to all chip suppliers, seeing a third-party giant like Meta seriously consider Alphabet’s hardware is a potent confirmation that the moat around Nvidia’s dominance is, perhaps, not as wide as once thought.
Retail Relief and Robotics Rallies
Meanwhile, away from the intense world of tech infrastructure, a few familiar names delivered genuine surprises to investors.
Department store veteran Kohl’s provided a much-needed shot of optimism in the battered retail sector, with its stock soaring a massive 23% after smashing third-quarter estimates. Analysts, polled by LSEG, had braced for a 20-cent per-share loss; Kohl’s instead reported an adjusted profit of 10 cents per share. Revenue also handily topped the consensus forecast. It appears management is finally finding traction in their turnaround efforts. The same could not be said for off-price retailer Burlington, which fell 5% after posting mixed results—profits were good, but sales just barely missed, a difference of about $10 million that Wall Street simply couldn’t forgive.
The efficiency trade also saw significant gains. Symbotic, a robotics firm focused on warehouse automation, rallied 15% after its fiscal fourth-quarter revenue clocked in at $618 million, beating analyst expectations. Similarly, the computing and electronics giant Keysight Technologies jumped 14% on stronger-than-expected earnings and the announcement of a robust new $1.5 billion share repurchase program. For companies like Symbotic, the message is clear: businesses are still willing to spend big on technology that promises to cut labor costs and boost operational speed, regardless of broader economic jitters.
Zoom and Chili’s: Sector-Specific Momentum
The market also saw several other pockets of strength. Video conferencing staple Zoom Communications gained 5% after comfortably beating third-quarter earnings and revenue forecasts, suggesting that the “work-from-anywhere” reality continues to provide a stable, if no longer explosive, business model.
In the casual dining space, Brinker International, the parent company of Chili’s, saw shares climb nearly 4% following a key upgrade from Citi. The bank cited expected relief from Brazil tariff drops, which should ease pressure on the company’s beef procurement outlook. Small moves in global trade policy, it turns out, can make a meaningful difference to the bottom line of a restaurant chain.
The Way Forward
The day’s market movements underscore a theme of highly selective, performance-driven investing. Companies that can deliver real surprises—whether it’s Kohl’s defying retail gloom or Symbotic proving the return on investment for automation—are being heavily rewarded. However, the most critical story remains the evolving landscape of AI. The potential for Meta to pivot from Nvidia is a five-alarm fire for the chip leader, forcing investors to grapple with the realization that the AI gold rush is transforming from a pure hardware play into a highly competitive silicon-customization battle.
“The AI chip market is moving toward co-opetition,” added Ms. Shen. “It’s not that Nvidia is suddenly irrelevant; they’re the benchmark. But their dominance means a target is painted on their back. Expect more deals like the Meta/Alphabet rumor to pressure their valuation until the company proves its next generation of chips can stave off the custom silicon threat.”
