Alphabet Inc. ( GOOG ) shares are trading higher Tuesday following a report indicating that Meta may use Google’s AI chips in its data centers.

GOOG shares are testing new highs. See what is driving the move here.

What To Know: Alphabet's Google ( GOOG ) is in talks with Meta and other cloud customers about a potential deal that would allow Meta to deploy Google's ( GOOG ) AI chips in data centers, according to The Information. The potential deal comes as Google ( GOOG ) ramps up efforts to compete with Nvidia in the AI chip market.

The report indicates that Meta could rent tensor processing units (TPUs) from Google Cloud as soon as next year, and is considering spending billions on Google AI chips starting in 2027. Google's ( GOOG ) TPUs are built to improve performance and lower costs for AI workloads across training and inference.

Alphabet stock has climbed over 50% since mid-September and has continued to gain traction in recent weeks alongside the launch of Gemini 3, which has received strong early support.

GOOG Analysis: Alphabet shares were up 0.58% at $320.33 at the time of publication on Tuesday, according to Benzinga Pro. The stock is trading near its 52-week high of $328.67, reflecting strong investor sentiment and a robust performance throughout the year, with a remarkable 68.0% increase year-to-date. This upward trajectory has positioned Alphabet as one of the largest players in the tech sector, with a market capitalization of $3.84 trillion.

Currently, GOOG is trading approximately 21.2% above its 50-day moving average of $264.31 and about 59.2% above its 200-day moving average of $201.18. The relative strength index (RSI) stands at 75.23, indicating that the stock is in overbought territory, which may suggest a potential pullback or consolidation in the near term. The absence of a clear resistance level implies that the stock could face upward pressure as it approaches the psychological barrier of $328.67.

The primary support level is established at $275.74, which aligns closely with the 50-day moving average, providing a solid cushion should the stock experience any downward movement. Investors may look to this level as a critical point to gauge the stock’s resilience against potential market corrections. With the stock trading significantly above both moving averages, the bullish momentum appears strong, but caution is warranted given the overbought RSI.

Alphabet’s performance relative to its peers, such as Microsoft and Meta, further underscores its competitive position in the market. As the tech landscape evolves, maintaining this momentum will be essential for sustaining investor confidence and capitalizing on growth opportunities.

In this context, the current setup suggests that while the stock remains in a strong bullish trend, the overbought conditions could lead to a short-term pullback. Traders may want to watch for any signs of weakness as the stock approaches its 52-week high, which could provide a more favorable entry point for new positions.

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