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

Alphabet's shares took a hit on Thursday, dropping 4% following news of a delay in the release of its highly anticipated artificial intelligence model, Gemini 3.5 Pro. According to a report from Bloomberg, the search engine titan is facing setbacks as it works to enhance the model's performance, which is reportedly behind schedule by several months. Sources indicate that the coding capabilities of Gemini 3.5 Pro have not met internal benchmarks, particularly at a time when competitors like OpenAI and Meta have recently introduced advanced AI models that surpass Google's existing software coding technologies. The Gemini 3.5 Pro was initially announced during the Google I/O developer conference in May, where it was indicated that the model would be utilized internally but was not expected to be available for wider use until the following month. An Alphabet representative commented to CNBC, stating the company is actively deploying a variety of models while ensuring they remain cost-effective for users. They added that the testing of the 3.5 Pro, along with an upgraded Flash model and other variations, is currently underway with partners and that the company is maintaining productive engagements with the U.S. government. The landscape for AI code generation has intensified, with providers like Anthropic and OpenAI leading the charge, alongside Chinese companies like Z.ai offering open-weight models for free in the open-source community. Just last week, Meta unveiled its Muse Spark 1.1 AI model, touted by AI chief Alexandr Wang as the firm’s most powerful tool for coding tasks to date. OpenAI also launched its GPT-5.6 Sol AI model, which CEO Sam Altman noted is 54% more efficient in token usage for coding applications, highlighting the competitive nature of AI development and the emphasis on performance and cost-effectiveness in this rapidly evolving field.