On November 25, 2025, Nvidia lost $190 billion in market capitalization in a single trading session, the largest one-day dollar destruction ever recorded by an American company. The trigger was not a recession, a supply-chain meltdown, or a regulatory hammer. It was a Bloomberg report, rapidly confirmed by The Information, that Meta Platforms is in late-stage negotiations to buy billions of dollars worth of Google’s seventh-generation Ironwood Tensor Processing Units for deployment starting in 2026 and 2027.
What Wall Street initially read as a domestic pricing skirmish between two Silicon Valley titans is quietly turning into the most consequential inflection point yet in America’s technological containment of China. The United States is accidentally stress-testing its own AI monopoly with internal competition, and the early results show the empire is still holding. But the cracks are widening faster than almost anyone predicted.
GPUs vs. TPUs: The Technical Fork in the Road
For more than a decade, Nvidia’s programmable graphics processing units became the default steam engine of artificial intelligence. Their flexibility allowed researchers to train ever-larger models on the same hardware that once powered video games. Google took a different path. It built fixed-function Tensor Processing Units optimized for the narrow but massive task of inference, running already-trained models at the lowest possible cost per token.
Source: Meta internal deck (Nov 2025), Google proposal), Bernstein Research
By 2025 the balance of spending has flipped. Inference now accounts for seventy to eighty percent of hyperscaler compute budgets. A single Ironwood pod of 9,216 chips delivers up to 4.7× the inference throughput of Nvidia’s flagship Blackwell GB200 at roughly half the power and one-third the street price per token. The economic gravity is irresistible.
Meta’s Quiet Rebellion
Meta’s planned 2026 capital expenditure on AI infrastructure is expected to land between forty and fifty billion dollars. Nvidia alone cannot fulfill that demand. Blackwell racks remain on twelve- to eighteen-month backorder, and each H200 or GB200 chip still commands close to forty thousand dollars on the gray market.
Google offered a way out: immediate cloud rentals of Ironwood capacity in 2026, followed by direct rack purchases for Meta-owned data centers in 2027. Internal Meta documents, seen by multiple outlets, project fifteen to sixty-five percent lower inference costs for Llama 405B and its successors. Anthropic signed a similar one-million-chip deal earlier in 2025. Salesforce and Apple are rumored to be next in line. The hyperscaler diversification wave is no longer theoretical.
Immediate Market Carnage and the “AI Rotation” Trade
The market reaction was instantaneous. Nvidia closed down seven percent. Alphabet rose five percent and briefly touched a four-trillion-dollar valuation. Broadcom, which designs both Google’s TPUs and Meta’s custom accelerators, surged eleven percent in a single day. AMD fell six percent, Arm Holdings four percent, and Intel two percent. A new Wall Street mantra emerged overnight: from “Nvidia monopoly forever” to “commoditization risk tomorrow.”
Winners and Losers: Who Actually Gains from the Split
Winners:
Google / Alphabet: Biggest winner. A decade-long internal bet suddenly becomes a multi-billion-dollar external revenue stream while expanding Google Cloud margins and pushing the stock toward four trillion dollars.
Meta Platforms: Clear winner. Supply diversification plus massive inference savings keep its six-hundred-billion-dollar domestic buildout on schedule.
Broadcom: Pure-play jackpot. The company designs the silicon for both Google’s TPUs and Meta’s in-house accelerators, and it just signed a new ASIC deal with OpenAI.
TSMC: Capacity king. Every advanced wafer Google consumes for Ironwood is a wafer Nvidia cannot book, giving TSMC even more pricing power in an already sold-out CoWoS market.
U.S. AI Ecosystem Overall: Net winner. Domestic competition accelerates innovation, forces price discipline, and widens the global lead.
Losers:
Nvidia: Obvious loser. Ten to twenty billion dollars of 2026 revenue is now at risk, gross margins above seventy-three percent are under direct threat, and the monopoly narrative is shattered.
AMD: Increasingly marginalized. The MI300X loses its “second-source premium” as customers realize the software gap is wider than the hardware gap.
Arm Holdings: Mild loser. Fewer GPU sockets mean slower growth for its server CPU roadmap.
Nvidia’s Counterattack
Jensen Huang has publicly dismissed the threat, reminding audiences that Google itself remains a major Nvidia customer and that CUDA runs every major model on earth. Behind the scenes the response is more urgent: Blackwell supply ramps are reportedly ahead of schedule, a new China-compliant B20 chip is launching in early 2026, and sources say Nvidia has quietly offered ten to fifteen percent discounts on 2026 volumes to lock in hyperscaler commitments.
The Geopolitical Angle Nobody Is Pricing In
Washington’s export controls since 2022 created the original shortage that pushed hyperscalers into Google’s arms. By banning H100, H200, and Blackwell sales to China, the U.S. forced Nvidia to redirect almost its entire cutting-edge supply to American and allied customers. That policy succeeded in starving Beijing of the best hardware, but it also made Nvidia’s prices untouchable and its lead times unbearable.
China is celebrating. Huawei’s Ascend 910C, Biren’s latest chips, and Cambricon’s Siyuan series are now within “nanoseconds” of Nvidia’s downgraded H20 on many workloads, and they are manufactured on domestic 7 nm lines. State media openly frames the Meta-Google deal as proof that America’s monopoly is cracking from within. Perhaps most dangerously, Google’s Ironwood ramp is consuming enormous amounts of TSMC’s CoWoS-L capacity, capacity that would otherwise have gone to Nvidia, indirectly giving Chinese fabs extra breathing room to scale.
U.S. vs. China Scorecard 2025–2030
The United States retains a two- to three-year lead in raw performance, software ecosystem, and talent density. China leads in power availability, political unity, and willingness to subsidize unprofitable chips until they dominate. If American gross margins collapse and R&D budgets shrink accordingly, the gap closes faster than any export control can prevent.
Conclusion and the 2026 Watchlist
Three binary events will decide the next chapter: the final size of the Meta-Google contract, whether Microsoft or Amazon announce TPU deals of their own and the incoming Trump administration’s decision on whether to allow H200 or Blackwell sales to China.
America just engineered the perfect stress test for its own technological hegemony. For now the empire is holding, but the margin is shrinking fast, and Beijing is watching every fracture with undisguised delight.
