Alphabet (GOOGL) Stock Falls as Google Reportedly Delays Gemini 3.5 Pro

Alphabet (NASDAQ:GOOGL) shares fell as much as 4% before recovering to a drop of around 2.5% after a Bloomberg report said Google has delayed the launch of Gemini 3.5 Pro, its most powerful AI model. When the report first landed, it knocked roughly US$200 billion off the company’s market value in a single session.

The delay itself is not the whole story. What worries investors is why it happened: the model reportedly struggled with coding, the exact area where Google’s rivals have pulled ahead. For a company that helped invent modern AI, that is an uncomfortable place to be.

What the Reports Say

Bloomberg, citing 10 current and former employees, reported that Gemini 3.5 Pro has fallen months behind schedule. Google had been expected to launch it around June, following its big developer conference in May.

The problem is performance. The model reportedly fell short of Google’s own internal targets, with coding singled out as the main weak spot. Google updated the model’s training data to try to fix this, but the results were said to be disappointing. It is worth noting this comes from Bloomberg’s reporting, not an official Google announcement. Google has said it is still testing the model with partners.

Why Coding Is the Real Worry

This may sound like a small technical issue, but it matters a lot.

Coding has become one of the most valuable uses of AI. Businesses are paying to have AI write and check software, and this is where rivals have built a clear lead. OpenAI’s coding tools and Anthropic’s Claude Code are widely seen as ahead of what Google currently offers. And in the past few days, China’s Moonshot claimed its new Kimi K3 model topped a major coding leaderboard.

So Google is not just slipping in general. It is slipping in the specific area that is heating up fastest and where competition is fiercest. That is why a single delayed model triggered such a sharp reaction in the stock.

The Bigger Picture for Alphabet

Here is the important balance. Google is not in trouble as a business.

It still has enormous advantages: billions of users across Search, Android, and Gmail; a fast-growing cloud business; and more data than almost anyone. Its AI reaches more people than most rivals simply because it is built into products everyone already uses.

The concern is a subtler one. Google may be winning the race to put AI in front of users while losing the race to build the single most capable model. Bloomberg’s report also points to internal frustration and some researchers leaving for competitors, which adds to the worry that Google’s momentum is slipping at a crucial moment.

What It Means for Investors

The most important thing to understand is that this is about competitive position, not Google’s current earnings, which remain very strong.

Our take: the delay is a genuine warning sign, but it is not a reason to give up on Alphabet. The company has the money, data, and reach to catch up, and it has recovered from being counted out before. Still, investors should watch closely to see whether Google can finally ship a top-tier model, because the longer Gemini 3.5 Pro slips, the more ground rivals gain in the areas that matter most.

For long-term investors, the question is simple: can Google turn its huge advantages into the best AI, not just the most widely used? Until it answers that, the stock may stay under pressure on this issue.