Alphabet shares fell 4% on Thursday after Bloomberg reported that the company's flagship Gemini 3.5 Pro AI model is months behind schedule, with its coding capabilities falling short of internal expectations1.
The delay comes at a competitive inflection point. Rivals including OpenAI and Meta have recently released new AI models that outpace Google's current offerings in software code generation, according to the Bloomberg report.
Alphabet first announced Gemini 3.5 Pro in May at the company's annual Google I/O developer conference, stating at the time that the model was already being used internally. The company indicated the model would not be ready for a broader rollout until the following month2.
An Alphabet spokesperson said the company is "shipping quickly across a wide range of models while keeping them highly cost-effective for customers". The company is currently testing Gemini 3.5 Pro, an upgraded Flash model, and other models with partners.
ANALYSIS The reported shortfall in coding performance is particularly consequential given that code generation has become a primary competitive axis among frontier AI labs, and the metric by which enterprise customers increasingly evaluate model utility.
The gap between the May announcement — when Alphabet said the model was in internal use — and the reported delay suggests that external-readiness standards proved harder to meet than internal deployment benchmarks.
The broader market context on Thursday saw the S&P 500 down 0.6% and the Nasdaq 100 down 1.4%. Alphabet also said it is "productively engaged with the U.S. government," though no further detail on that engagement was provided in the available reporting.