Shares in Google parent Alphabet (GOOGL) climbed Monday after the company announced that a new chip for its AI model is in development. According to The Information, Google is developing a server chip designed to optimize its Gemini AI model. The report stated that the new chip, called Frozen v2, could be launched as soon as 2028.
The “Frozen” chip is separate from Google’s tensor processing units, or TPUs, which are already in production. The new semiconductor would run six to 10 times more efficiently and respond to queries more quickly than its current custom chips. Alphabet told CNBC in a statement that its teams are “constantly researching and experimenting with new innovations to deliver maximum performance and efficiency for our users and customers” and that “while not every project moves into production, this rigorous exploration is central to our full stack approach.”
“By co-designing our hardware and software from the ground up, we ensure our systems are integrated and highly optimized for real-world workloads,” Alphabet’s statement added. GOOGL stock climbed 1.6% on Monday after the report, helping eat into the stock’s 5% decline since June 20.
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Despite the positive AI chip news, Google’s AI efforts still face a more immediate challenge. The next Gemini Pro release is delayed, and Google has lost several senior researchers to rivals, as Chinese models gain ground with American businesses. Those models now account for 45% of U.S. company token use. With earnings on Wednesday, analysts are hopeful that a solid report and the new AI chip could spark a rally for GOOGL stock, which has climbed 11% in 2026. Analysts on Wall Street are bullish and have issued buy calls before the report. Financial institution BMO Capital last week doubled down on its price prediction on Alphabet stock (GOOGL). Brian Pitz, Managing Director of the financial institution, maintained his buy rating for GOOGL and increased the price target in a note to clients on July 17.