Alphabet shares surged following news of a new, powerful AI chip for Gemini

Alphabet’s stock jumped 3% on Monday after the insider publication The Information reported that the company is developing a new specialized AI chip for Gemini. It could be 6 to 10 times more energy-efficient than its current TPU processors. The tech giant expects to roll out the new chip by 2028, according to the article.

The chip, codenamed "Frozen v2," will "embed" part of the Gemini architecture directly into the silicon, the publication explains. This will reduce the amount of computation and data transfer required to generate responses to user queries.

The project is designed to address a serious internal shortage of computing capacity, which is reportedly already forcing Google Cloud to turn away external customers. In early June, the company agreed to pay SpaceX nearly $1 billion a month to make up for the shortfall and meet its obligations, CNBC reports.

The trade-off will be reduced flexibility: according to The Information, the chip will only be compatible with future Gemini models if Google maintains the same underlying architecture. The publication reports that Frozen v2 is viewed more as a pilot project. There are currently no plans to manufacture it on the same scale as the TPU.

Alphabet was unable to respond promptly to a request for comment, according to CNBC.

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