Alphabet stock falls on report of Gemini AI model delays

Investing.com -- Alphabet Inc. (NASDAQ: GOOGL) closed down 4.4% on Thursday, erasing $200 billion in market capitalization, following a Bloomberg report that Google is months behind schedule on delivering Gemini 3.5 Pro, its most powerful flagship AI model.

The delay stems from Google taking additional time to improve the model’s capabilities, particularly in coding, according to people familiar with the matter cited in the report. The setback has frustrated Google engineers, AI researchers, and managers, with many concerned the company risks losing market position as rivals Anthropic and OpenAI produce models that exceed Gemini’s capabilities.

Both OpenAI and Meta Platforms Inc. recently released new models that outpace Google’s current offerings in AI for writing code. Late last month, Google updated the data being used to train Gemini to improve these skills, but the results were disappointing, according to the report.

A Google spokesperson stated the company is shipping quickly across a wide range of models while keeping them cost-effective for customers. The spokesperson added that Google is currently testing 3.5 Pro, an upgraded Flash model, and other models with partners, and is productively engaged with the US government on model testing and broader frameworks.

The report noted that Google’s structure—with multiple layers of stakeholders involved in preparing models for release and working to integrate AI across a vast product portfolio including Search, Maps, and YouTube—can cause delays. Furthermore, Google has been in ongoing talks with the US government, which is increasingly monitoring the advanced models of AI companies regarding capabilities and industry safety standards.

Alphabet reports its quarterly results next week, where investors will be watching closely and could receive a much-anticipated update from leadership on the revised timeline for Gemini 3.5 Pro and the company’s broader AI development strategy.

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