Alphabet Stock Rises on Report of More Efficient AI Chip Development

Alphabet shares (GOOGL) closed 1.51% higher on Monday after The Information reported the company is developing a new server chip, internally codenamed “Frozen v2,” aimed at improving the efficiency of its Gemini AI models.

The chip would permanently embed parts of Gemini’s architecture into the silicon, reducing the computational steps and data movement needed to process queries. Engineers project that “Frozen v2” could handle six to ten times more tokens per unit of power compared to Google's current Tensor Processing Units (TPUs), according to the report.

Alphabet confirmed to CNBC that its teams "constantly research and experiment with new innovations to deliver maximum performance and efficiency for our users and customers." The company stated that this "rigorous exploration is central to our full stack approach," emphasizing the benefits of co-designing hardware and software.

The development is reportedly intended to address a significant internal compute shortage that has strained resources, potentially impacting Google Cloud's ability to serve external clients. The chip is targeted for deployment around 2028 and is seen as a specialized addition to Google's custom-chip portfolio rather than a replacement for TPUs.