Alphabet Is Reportedly Developing a More Efficient AI Chip. It’s Stock Is Climbing

Alphabet's shares are rising on Monday following reports that it is developing a more efficient AI chip.

Concretely, the shares were gaining more than 2.70% at 10:56 a.m. ET, topping $356.

The report in question, published by The Information, detailed that the chip would permanently embed parts of Gemini's architecture into the silicon.

Called "Frozen v2," it could serve between six and ten more tokens per unit of power than the company's newest model. The product could be deployed in 2028 and serve to ease internal computer shortages. In fact, the company last month agreed to pay SpaceX almost $1 billion a month to address computing needs.

The company told CNBC that it is "constantly researching and experimenting with new innovations to deliver maximum performance and efficiency for our users and customers."

It added 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," the statement added.

Companies are racing to develop the most attractive AI models, but the competition is increasingly fierce, especially as Chinese companies continue to gain traction by releasing open-weight AI models that can be downloaded, customized and operated on private infrastructure.

Several Chinese models currently occupy the top positions on OpenRouter, a marketplace that allows developers to access and compare hundreds of AI systems. Tencent, Xiaomi, DeepSeek, MiniMax and Z.ai collectively hold the platform's five most-used models by weekly token usage, according to Axios. All five are open-weight models, enabling developers to modify and deploy them independently.

The latest momentum follows the release of Kimi K3 by Beijing-based Moonshot AI. Earlier this week, the company announced that its flagship model had posted benchmark results alongside leading American systems, including Anthropic's Fable 5 and OpenAI's GPT-5.6 Sol. Moonshot also said it intends to release Kimi K3 as an open-weight model on July 27, according to the outlet.

The growing popularity of open-weight systems reflects changing priorities among enterprise customers. Many businesses do not require frontier-level performance for everyday workloads and instead prioritize cost, flexibility and control over where data is processed.

"There are going to be open-source models that eventually handle 95% of enterprise queries," one investor told Axios, while noting that premium systems may remain reserved for more complex applications. Mozilla Chief Technology Officer Raffi Krikorian compared the use of frontier AI models for everyday work to "driving a Ferrari to Whole Foods," according to the publication.