Google is now an AI chip company?
- Kevin W. Frisz
- Nov 25, 2025
- 3 min read
November 25, 2025
Summary
Two big stories today. First, Google is in advanced discussions to sell its own AI chips, built on a new architecture in partnership with Broadcom (AVGO). Wow. That headline is pressuring a lot of the AI-related stocks today, especially the key AI chip competitors, Nvidia and AMD.
Second, we got an update from the Fed's mouthpiece at the Wall Street Journal. The article described the latest debate between Fed governors but implied that a rate cut in December is more likely than not, if Chair Powell decides to do so.
Google's AI Chips
The top story on Bloomberg this morning is that Meta Platforms (aka, Facebook) is in talks with Google to buy billions worth of its AI chips. Um… wut? Yes, you read that correctly. Previously, Google made in-house processors to drive its own cloud platform and vast online properties. This sale to Meta (if it happens) would be the first significant sale of its in-house to an outside party — and for AI no less! Moreover, the fact that a significant rival to Google (ie, Meta) is willing to buy them validates the technology.
So where did this come from? Google has been designing chips for its in-house use for nearly 20 years. However, in 2024 and 2025, Google had two big breakthroughs in speed — Trillium in 2024 (5x faster than previous versions) and Ironwood in late 2025 (10x faster). These two are now legitimate competitors to Nvidia’s AI chips.
They had this breakthrough by taking an entirely different approach to designing chips. Nvidia’s chips are GPUs (graphics processing unit). Google’s chips are TPUs (tensor processing unit). The most basic difference is that GPUs are a swiss army knife, while TPUs are a scalpel. GPUs are generalist chips that can do lots of functions in high-powered ways. TPUs are designed to do a very specific job, enabling them to to it very quickly and very efficiently.
How does Broadcom (AVGO) fit in? A helpful analogy: Google is the architect, Broadcom is the engineer, and Taiwan Semi (TSM) is the manufacturer. TSM is the manufacturer for everyone’s chips tho. So they win no matter what. The focus here is on Google and Broadcom. These two are effectively a tag-team on this venture. So they will likely trade together on this news. Broadcom is one of the less well-known AI stock plays in the market. But we’ll save them for another day. All you need to know about Broadcom for now is (1) they’re Google’s partner here, and (2) they’re huge — the 6th largest stock in the whole market (bigger than Meta, Tesla, and Berkshire).
There are also implications for other members of the AI basket. AMD is getting hit, as this seems to lessen the chance that they become a significant supplier of high-end AI chips someday. Oracle is getting hit, as it seems to lessen the odds that OpenAI remains the dominant AI platform over the next few years. And so on.
There’s lots more details here. But this is the general story (for the moment, anyway). And for the stocks? Well, this is the punchline: this is whole new revenue line item for Google. And it has the potential to be massive.
Fed Outlook for December
Besides AI, the only thing that seems to move the market is news about the Fed. As a reminder, the next Fed meeting is December 9-10th. The Fed will announce whether it will cut rates again by a quarter-point. As regular readers know, the market generally loves rate cuts (for lots of reasons). So any news indicating an increased chance of a rate cut should be positively received by the market.
Last night, we got a WSJ article from the Fed’s mouthpiece, Nick Timiraos. It basically said, “The vote will be close. But Chair Powell can push a cut through if he wants.” That seems to be the market consensus at the moment. The odds of a rate cut, as implied by the futures market, is now 80% — compared to 30% just two trading sessions ago.
This morning, we got monthly retail sales and the producer price index (aka, inflation reading for manufacturers). Both metrics were weaker than expected, suggesting a slowing economy and slowing inflation. These two metrics support a rate cut. More economic datapoints will leak out over the next couple weeks. And each one will be scrutinized to a much greater degree than normal. Stay tuned.
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