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AMD (NASDAQ:AMD) is supplying processors for a new AI computing system unveiled Monday by Google (NASDAQ:GOOGL), as the search giant expands its challenge to Nvidia (NASDAQ:NVDA).

Google’s new TPU 8tx combines its own AI chips with AMD’s EPYC processors to help banks, government agencies and other customers process sensitive information securely.

The partnership is notable because Google moved its flagship TPU systems to its own CPUs earlier this year, but turned to AMD for the new system’s security capabilities.

Why Google Turned to AMD

Google introduced its TPU 8t and 8i systems in April using its own Axion CPUs, replacing the x86 processors used in earlier systems.

For its new 8tx, however, Google has chosen AMD’s fifth-generation EPYC processors.

The system focuses on confidential computing, using AMD’s security technology to protect sensitive information even while AI models process it.

Google Cloud executive Mark Lohmeyer said the partnership brings hardware-enforced confidential computing to cloud TPUs for the first time.

AMD Can Benefit From Its Rivals’ Success

AMD competes with Nvidia in the AI chip market, but it also sells the processors that help run AI systems built by other companies.

That means AMD can benefit even when customers choose Nvidia’s chips or Google’s own technology over its competing products.

AMD says more than 10 major cloud providers and AI laboratories already use its EPYC processors alongside a range of AI chips.

Bloomberg Intelligence estimates Google’s TPU-related annual sales could grow from $12 billion this year to more than $135 billion by 2028.

However, most of Google’s new TPU systems use its own Axion CPUs, so AMD won’t necessarily benefit from all that growth. Neither company has disclosed the value of the new arrangement.

AMD Rallies as Nvidia Faces Separate Pressure

AMD shares climbed more than 10% Monday amid a broader semiconductor rebound. Oppenheimer upgraded AMD Monday to Outperform with a $600 price target.

Nvidia fell roughly 6%, pressured by a separate independent board investigation into reports that CEO Jensen Huang was targeted by a foreign intelligence operation.

Prediction market traders expect more volatility. On Polymarket, Nvidia has a 70% chance of falling to $168 before November ends, compared with a 36% chance of climbing to $200.

Google expects the new TPU systems to become available in 2027.

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