Alphabet Inc. (GOOG) caught a nice lift Tuesday after reports emerged that Meta might tap Google's AI chips to power its massive data center operations. If you're keeping score at home, this is Google making a serious play to compete with Nvidia in the lucrative AI chip market.
According to The Information, Google is deep in discussions with Meta and other cloud customers about a deal that would let Meta deploy Google's tensor processing units—TPUs, in Silicon Valley speak—in its data centers. The timeline looks something like this: Meta could start renting TPUs from Google Cloud as soon as next year, with a potential spending commitment running into the billions starting in 2027.
Google's TPUs are designed specifically to handle AI workloads more efficiently, delivering better performance while cutting costs for both training models and running inference. It's Google's answer to the AI chip arms race, and landing Meta as a customer would be a significant validation of that strategy.
The market liked what it heard. Alphabet shares have been on a tear lately, climbing more than 50% since mid-September. The momentum has only accelerated with the recent launch of Gemini 3, which has drawn strong early enthusiasm from developers and businesses.
The Technical Picture
Alphabet was trading up 0.58% at $320.33 on Tuesday, dancing near its 52-week high of $328.67. That puts the stock up a remarkable 68% year-to-date, with Alphabet now sporting a market cap of $3.84 trillion—making it one of the absolute heavyweights in the tech sector.
The stock is trading roughly 21.2% above its 50-day moving average of $264.31 and about 59.2% above its 200-day moving average of $201.18. Those are strong bullish signals, showing sustained upward momentum over multiple timeframes.
Here's the catch: the relative strength index sits at 75.23, which puts Alphabet firmly in overbought territory. That doesn't mean the stock has to fall—momentum can carry things higher than you'd expect—but it does suggest some caution might be warranted. A pullback or consolidation phase wouldn't be surprising at these levels.
The primary support level to watch sits at $275.74, which aligns closely with that 50-day moving average. If the stock does retreat from these heights, that's where investors will be watching to see if buyers step back in. The absence of clear resistance ahead means the psychological barrier of that 52-week high at $328.67 is really the next test.
Why This Matters
Alphabet's performance relative to peers like Microsoft and Meta highlights its competitive strength as the tech landscape shifts toward AI infrastructure. The company's ability to maintain this momentum will be crucial for sustaining investor confidence and capturing the growth opportunities ahead.
Right now, the setup suggests a stock in a strong bullish trend that's running a bit hot. Traders might want to watch for any signs of exhaustion as the stock approaches that 52-week high—a slight pullback could offer a better entry point for anyone looking to build a position. But with Google's TPU business potentially gaining significant traction, the underlying story remains compelling.