Waymo's 1,000-TOPS Custom Chip Hits NVDA Where It Hurts
Waymo's in-house 1,000-TOPS chip on TSMC 5nm cuts Nvidia and AMD from its robotaxi supply chain. What this means for AV chip revenue ahead of NVDA earnings Aug. 26.
Key Points
- Waymo's custom in-house chip exceeds 1,000 TOPS and is already in production on TSMC's 5-nanometer process, directly displacing Nvidia and AMD from its robotaxi supply chain.
- Alphabet is running a coordinated, multi-front custom silicon strategy — Waymo's chip, the $120 billion Marvell chip deal, and Google TPUs — that systematically reduces spend with third-party chip vendors.
- Traders have five days before Nvidia's August 26 earnings to reprice how much AV-vertical revenue is genuinely at risk.
Waymo has built a chip that does what Nvidia's automotive solutions do — and it did it without Nvidia. The custom silicon exceeds 1,000 trillion operations per second, runs on TSMC's 5-nanometer process, and is already installed in Waymo's new Ojai robotaxis operating in San Francisco, Phoenix, and Los Angeles. For Nvidia bulls heading into the August 26 earnings print, this is the week's most uncomfortable data point.
One Chip, Three Markets, Zero NVDA
The Ojai vehicle — built on Zeekr's minivan platform and integrating Waymo's sixth-generation autonomous driving stack alongside Google's Gemini AI assistant — is the first commercial deployment of the new in-house silicon. That deployment is not a prototype or a pilot. It is a production rollout across three of the largest urban ride-hail markets in the United States. Every Ojai that hits the road with Waymo's custom chip is a unit that will never carry an Nvidia Drive or AMD Instinct processor. At scale, that matters.
To understand the magnitude of the displacement risk, consider Nvidia's automotive segment trajectory. Nvidia has repeatedly flagged autonomous vehicles as one of its highest-growth forward verticals, with automotive revenue growing triple-digits year over year in recent quarters. The AV business is still a small fraction of total Nvidia revenue — the company's data center segment, which accounts for the overwhelming majority of sales, dwarfs everything else — but it is the segment Wall Street has used to justify premium multiple expansion into the next decade. Waymo is the most advanced robotaxi operator in the world by commercial deployment scale. If the most technically credible AV company on earth is building its own chips, that is a signal about where the rest of the industry is headed, not an isolated exception.
AMD's exposure is parallel and arguably less discussed. The company has invested meaningfully in AI inference chips targeting edge and automotive use cases, and Waymo had been among the operators evaluating third-party silicon for its compute stack. The custom chip development closes that door. AMD's AV revenue is not material to its current income statement, but any analyst building a bull case for AMD's 2027–2028 earnings based on AV traction needs to update their assumptions today.
Alphabet's Silicon Strategy Is No Longer Piecemeal
This is where traders need to zoom out. Waymo's chip is not an isolated engineering project — it is the third major custom silicon initiative Alphabet has disclosed or advanced in the past 30 days, and the pattern is deliberate. Google's Tensor Processing Units have been reducing the company's Nvidia data center spend for years. The $120 billion Marvell chip partnership — announced this week, with a $12.18 billion warrant attached — shifts custom AI networking silicon away from Broadcom and toward a dedicated supply arrangement. And now Waymo's 1,000-TOPS chip completes the picture at the edge.
Alphabet is building a vertically integrated silicon supply chain. The strategic logic is identical to what Apple executed with its M-series chips starting in 2020: replace best-of-breed third-party components with purpose-built in-house silicon that optimizes for the specific workloads that matter to the company, reduce per-unit compute costs, and eliminate the vendor markup embedded in buying finished chips from Nvidia or AMD. Apple's transition from Intel to M-series chips compressed Intel's revenue by billions annually and permanently impaired a key customer relationship. Nvidia and AMD should take the Waymo announcement in that context, not as a one-off engineering flex.
Broadcom (AVGO) faces its own version of this pressure. The Marvell-Google deal that sent MRVL up more than 9% on Wednesday is a direct signal that Google is diversifying its custom chip supply away from Broadcom's dominant position in AI networking ASICs. Broadcom has derived an increasingly large share of its AI revenue from its relationship with Google, and any shift in that relationship's structure — even at the margin — shows up materially in Broadcom's forward estimates. The market has not fully priced this yet; AVGO has not reacted to MRVL's pop with symmetric selling pressure, which may represent either a delayed reaction or an investor judgment that the Broadcom-Google relationship remains sufficiently entrenched to absorb the Marvell expansion.
Five Days to NVDA Earnings — Here's the Level to Watch
TSMC is the clean winner in this configuration and deserves explicit recognition. Every custom chip that Alphabet, Apple, or any other hyperscaler builds in-house still needs to be fabricated somewhere. Waymo's chip runs on TSMC's 5-nanometer node. The Marvell chips serving Google's network infrastructure run on TSMC advanced nodes. Google's TPUs are TSMC-manufactured. The shift from merchant silicon to custom silicon does not reduce TSMC's revenue — it increases it, because hyperscaler custom chip programs tend to be locked into long-term capacity agreements at premium pricing. TSMC posted 37.7% revenue growth and 53.2% earnings growth with a 67.7% gross margin in Q2 2026. Bernstein's $554 price target reflects the view that supply constraints — CEO C.C. Wei said publicly in June that capacity is "far from enough" — translate directly into pricing power. TSM's ex-dividend date for its $1.114 cash dividend is September 16, 2026, providing a near-term income catalyst on top of the growth story.
For Nvidia, the Waymo chip is a five-day countdown problem. Earnings hit on August 26, and analysts covering the print will now be fielding questions about AV revenue durability that were not on the agenda a week ago. Nvidia's bull case has always rested on the data center segment — which is enormous, growing, and relatively insulated from Waymo's custom chip in the near term. But the multiple Nvidia trades at prices in every optionality, including AV. If management is asked on the call to quantify AV revenue exposure to customer in-house silicon development and gives an evasive answer, the market will draw its own conclusions. The SOXQ semiconductor ETF is up 99% year to date; there is no margin for ambiguity at these levels.
The number to watch into the print: Nvidia's automotive segment revenue guidance for the next quarter. Any deceleration in that line item — which management had been guiding toward triple-digit growth — will be read against the Waymo headline and hit the stock on a tape that is already priced for perfection. Traders long NVDA into earnings should have a plan for that scenario. Traders long TSM and MRVL are positioned on the right side of Alphabet's silicon strategy regardless of what Nvidia says Wednesday night.
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