By Deborah Mary Sophia and Rashika Singh July 21 Alphabet faces heightened scrutiny from investors as a delay in the launch of a model key to its AI ambitions adds to worries over the payoff from massive data-center spending, months after raising expectations with a blockbuster…
arter for cloud sales. The Google parent — set to report second-quarter results on Wednesday — has delayed from June the launch of its next flagship model, Gemini 3.5 Pro, built especially to catch up with rivals in the lucrative market for AI coding tools and agentic AI tasks
The setback has raised concerns as Chinese open-source models increasingly challenge top U.S. labs for customers amid growing worries about steep AI bills that have also fanned fears that Big Tech could be over-building capacity. “While Google is missing the boat on AI coding and that’s a very real growing concern … Google’s strategy is all about the ecosystem,” said Dave Wagner, portfolio manager at Aptus Capital Advisors. Alphabet increased its 2026 capital expenditure guidance to between $180 billion and $190 billion in April and has announced plans to raise about $85 billion in equity offerings, including an investment from Berkshire Hathaway.
Alphabet shares are down about 9% since late April — when it posted a 63% jump in cloud sales — lagging other so-called “Magnificent Seven” stocks during the period. The company has also lost high-profile employees, including Gemini co-lead Noam Shazeer and Nobel laureate John Jumper, a key Google DeepMind executive, to rivals. Analysts have said Google’s advantage in the AI race lies in its ownership of a large consumer distribution network, on top of its AI models, cloud infrastructure and custom silicon.