Gemini 3.5 Pro Delay Sends Alphabet Stock Lower: What Investors Must Consider Before Making a Move

Google has come across a key hurdle in its AI development journey. Its parent company, Alphabet's, stock took a sharp dip on Thursday after reports surfaced that Gemini 3.5 Pro, the company's next big AI model, is behind schedule. Google has indicated that it wants to get the model right before releasing it to the world, but the explanation has failed to calm investors.

As a result, Alphabet shares sank 4% on Thursday after Bloomberg reported that the Gemini 3.5 Pro AI model is months behind schedule due to the company’s efforts to improve its performance.

The company is scheduled to release its Q2FY26 earnings report on July 22, where it may share more details about the timeline of the model’s release and AI investment outlook.

The development comes as the AI landscape continues to be flooded with new model releases. While the industry continues to evolve to find the perfect AI model, falling behind on timing is quickly spooking investors who are eager to capitalise on the AI wave.

Alphabet Stock Slides

Alphabet shares fell 4% on Thursday, closing at $353.81 on reports about Gemini 3.5 Pro’s delay. The stock has remained largely flat over the past five sessions and is down 4% over the last month. Alphabet has delivered exceptional longer-term performance, rising 11.4% so far in 2026.

The company remains among top leaders in the AI race and its 91% one-year return shows strong investor confidence. At the same time, the market is turning increasingly sensitive to AI spending, competition and execution delays, which was seen in the stock’s Thursday performance. https://www.reuters.com/technology/artificial-intelligence/artificial-intelligencer-wall-street-cant-decide-what-think-about-ai-2026-06-24/

What Is Known About Gemini 3.5 Pro’s Delay
https://www.reuters.com/business/google-gemini-launch-delayed-tech-falls-short-internal-goals-bloomberg-news-2026-07-16/

According to Reuters, Alphabet’s Gemini 3.5 Pro model was expected to launch in June. The announcement was made by CEO Sundar Pichai at Google’s I/O developer conference earlier. Delays have raised concerns as rivals OpenAI and Anthropic continue releasing improved models.

“We're currently testing 3.5 Pro, an upgraded Flash model, and other models with partners, and we're productively engaged with the U.S. government…We're shipping quickly across ​a wide range of ​models while ⁠keeping them highly cost-effective for customers," a spokesperson was quoted as saying by Reuters.

Growing Pressure in the AI Race

Late last month, Google updated its training data for Gemini to improve the model’s capabilities, but the results fell short of expectations, Bloomberg News reported. Gemini 3.5 Pro model’s coding abilities have reportedly not met internal benchmarks. It may be a small setback for the broader AI industry, but it highlights where the sector stands now.

Companies like OpenAI and Anthropic have recently launched AI models that perform better than Google’s current offerings. The reaction from investors shows that the fast-moving AI sector is becoming less forgiving of delays.

Is This An Opportunity To Buy?

According to Morgan Stanley, Big Tech firms will spend a combined trillion dollars on capital projects next year. In its Q2 next week, Google is also expected to share more details about its investment plans and outlook. Investors should closely watch it and follow key analysts to understand how the stock might perform in the near to medium term.

As of now, JPMorgan, Goldman Sachs, Wells Fargo, and Bank of America are among the top analysts maintaining bullish ratings on Alphabet. Raising the target to $405 to $450 range, they cite strong search growth, cloud growth and expanding AI opportunities for Google. Wells Fargo believes that Alphabet has the financial strength to fund further investments, while BofA doesn’t see any major disruption to its core search business due to AI rollout. https://finance.yahoo.com/technology/ai/articles/morgan-stanley-gives-google-stock-173300559.html

Investors looking to add this stock in their portfolio can closely watch if these analyst recommendations change after next week’s Q2 earnings report.

Message For Investors

Alphabet’s sharp stock decline on Thursday highlights the risks of investing in AI-linked stocks. At the same time, one delayed project may not necessarily impact the long-term outlook. Google remains a dominant tech player with strong search and cloud growth, while its rising investment in AI projects could further strengthen its growth opportunities.

For investors looking to ride the AI wave, understanding long-term prospects and company fundamentals matters more than reacting to short-term market movements. Instead of focusing only on who releases models fastest, it is equally important to identify companies that can build sustainable AI products and create long-term value.