Alphabet Shares Fall as Gemini 3.5 Pro Faces Delays

Alphabet shares fell between 2% and 4% after reports emerged that the release of its flagship AI model, Gemini 3.5 Pro, has been delayed for a third consecutive time. Originally promised by CEO Sundar Pichai for a June rollout following the May Google I/O developer conference, the model has repeatedly missed targets due to technical failures, including hallucinations and inconsistent outputs. Specifically, the model failed to meet internal goals for coding capabilities, recursive tool-calling, and SVG generation.

Alphabet Inc. reportedly saw Google DeepMind discard an earlier version of the model to restart pre-training from the ground up, though the rebuilt version still struggles to compete with rivals. The delays are further attributed to internal compute capacity constraints and friction between competing internal factions building separate coding tools. To resolve these hardware shortages, the company may expand compute deals with SpaceXAI.

These shortcomings occur as competitors OpenAI and Meta Platforms Incorporated launch the GPT-5.6 Sol and Muse Spark 1.1 models, which reportedly outperform Google in software code generation. In response, Google is considering stopgap releases of smaller models, such as Gemini 3.6 Flash, while Gemini 3.5 Flash remains the default for its app and AI Search. The company maintains it is testing the 3.5 Pro model with partners and collaborating with the U.S. government on safety frameworks.