A report this week that Alphabet’s Google is in talks to sell artificial-intelligence chips to Meta Platforms shook up the shares of some of the world’s most valuable companies.

Nvidia, the leading AI chip maker, dropped 2.6% Tuesday on concern that Google could snatch some of its booming data-center business. Advanced Micro Devices, a smaller but still powerful rival, fell 4.2%.

But traders seemed to take a deep breath Wednesday. Both semiconductor stocks regained some of the lost ground. Nvidia gained 1.4%, and AMD rose 3.9%. That seems about right given that investors are only in the early stages of assessing what Google is doing.

The logic behind Tuesday’s pullback was simple. Citing a person familiar with the matter, The Information reported Monday that Meta is in discussions to use Google’s tensor processing units, or TPUs, in its data centers starting in 2027.

These chips, a form of application-specific integrated circuit, or ASIC, present a cheaper and more energy-efficient alternative to Nvidia and AMD’s more flexible graphics processing units, or GPUs.

While there may be a world in which Google’s ASICs—or ASICs in general—eat into the market for GPUs, Nvidia and AMD aren’t in any immediate danger, Morgan Stanley analysts Brian Nowak and Joseph Moore said in a research note Wednesday.

「We don’t think Meta’s aspirations are changing: they want to diversify their compute infrastructure,」 wrote Nowak and Moore. The chips with the best return on investment may win out at some point, they added, but not right now.

Nvidia is on particularly solid ground. Demand across the AI landscape is growing, Morgan Stanley noted, which benefits suppliers of both ASICs and GPUs. Nvidia is also a Google supplier, selling it some $20 billion worth of hardware.

「We’re delighted by Google’s success – they’ve made great advances in AI and we continue to supply to Google,」 an Nvidia spokesperson told Barron’s. 「Nvidia offers greater performance, versatility, and fungibility than ASICs, which are designed for specific AI frameworks or functions.」

AMD may face a bit more scrutiny from investors, given its current positioning as an OpenAI supplier and an alternative to Nvidia.

「The company has built their story around becoming the viable second source to NVDA, and hitched their wagon to OpenAI’s horse,」 wrote Bernstein analyst Stacy A. Rasgon.

With Google’s Gemini in competition with OpenAI’s large-language models, and Google’s TPUs a potential new alternative to Nvidia chips, Monday’s report puts the AMD narrative at risk, Rasgon said.

AMD didn’t immediately respond to a request for comment.

Bernstein reiterated an Outperform rating on Nvidia shares and a Market Perform rating for AMD.