Alphabet Inc.

NASDAQ Global Select
Back to all articles
Somewhat Bearish -45

Alphabet shares fall on report its most powerful AI model Gemini 3.5 Pro is delayed

📉 Alphabet shares fell 4% following reports that the Gemini 3.5 Pro AI model release has been delayed by several months.

💻 The delay is driven by coding capabilities falling short of internal expectations, a key area where rivals currently lead.

🚀 Competitors like OpenAI and Meta recently debuted new models that outpace Google's current offerings in generating software code.

🗓️ The model was previously announced at the May Google I/O conference but will not be ready for broader rollout until later than expected.

💰 An Alphabet spokesperson confirmed the company is testing upgraded Flash models while keeping them cost-effective for customers.

🤝 Google stated it is productively engaged with the U.S. government regarding its AI initiatives despite the technical delays.

⚖️ Meta's Muse Spark 1.1 and OpenAI's GPT-5.6 Sol are cited as examples of rivals offering superior agentic and coding performance.

📊 The report highlights that code generation has become a primary use case for major AI model providers in the open-source ecosystem.

Bullish Signals
  • Alphabet maintains engagement with the U.S. government on AI initiatives, indicating continued strategic alignment with public sector needs.
  • The company is actively testing upgraded Flash models alongside the delayed 3.5 Pro, suggesting a diversified portfolio of available AI tools.
  • A spokesperson affirmed the commitment to keeping AI models highly cost-effective for customers, addressing a key competitive metric.
Risk Factors
  • Alphabet shares sank 4% immediately following the news of the Gemini 3.5 Pro delay, indicating negative market reaction to the setback.
  • The flagship model's coding capabilities were reported as short of internal expectations, exposing a weakness in a critical high-value use case.
  • Google is now months behind schedule on its most powerful AI model while rivals like OpenAI and Meta have already debuted superior coding models.
  • Competitors are successfully pitching their AI models as more cost-effective relative to performance, potentially eroding Google's value proposition in the enterprise market.
Full Analysis
Alphabet shares dropped approximately 4% after reports indicated a delay in the release of its flagship Gemini 3.5 Pro artificial intelligence model. According to Bloomberg, the company is pushing back the launch date by months as it works to improve performance, specifically addressing coding capabilities that fell short of internal expectations. The delay comes amidst intensifying competition where rivals like OpenAI and Meta have recently unveiled new models that outperform Google's current offerings in software code generation. While Google previously announced the model at its I/O conference in May for internal use, the postponement suggests significant challenges in meeting the high standards required to compete effectively in the AI coding sector. Despite the setback, an Alphabet spokesperson emphasized that the company remains committed to shipping models quickly while maintaining cost-effectiveness for customers. The firm stated it is actively testing upgraded versions with partners and engaging with the U.S. government, though the specific timeline for a broader rollout has been pushed back due to these technical hurdles. Industry context highlights the pressure on Google as competitors like Meta and OpenAI release models with superior token efficiency and agentic coding capabilities. This development underscores the critical importance of AI performance in maintaining market share and attracting enterprise customers who prioritize cost-effective, high-performance solutions for their software development needs.