What Happened?
Shares of online advertising giant Alphabet (NASDAQ: GOOGL) fell 4.5% in the afternoon session after reports revealed that the release of its flagship Gemini 3.5 Pro AI model has been delayed by several months.
Alphabet would take more time to improve the model's capabilities, particularly in software coding, where it reportedly fell short of internal expectations. The setback came at a critical time in the AI race, as rivals like OpenAI, Anthropic, and Meta debuted more competitive models. The market reacted negatively because Gemini 3.5 Pro, which was first announced at the Google I/O developer conference in May, is viewed as a crucial catalyst for Alphabet to maintain its competitive edge in enterprise AI.
A multi-month delay raises concerns that Google is losing ground to its peers, potentially threatening its long-term market share in generative AI applications. While a Google spokesperson confirmed the company is currently testing the 3.5 Pro model with partners and the U.S. government, the lack of a firm consumer rollout date has weighed heavily on investor sentiment.
The shares closed the day at $354.64, down 4.4% from the previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Alphabet? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Alphabet’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 17 days ago when the stock gained 5% on the news that the company's shares officially debuted in the Dow Jones Industrial Average taking the slot vacated by Verizon.
The Dow milestone is symbolic more than mechanical. The real driver was a relief bounce in an oversold name, helped by a risk-on tape after the US-Iran de-escalation. Index inclusion forces Dow-tracking funds to buy GOOGL, and at ~$350 a share, Alphabet immediately becomes a top component.
Alphabet is up 12.9% since the beginning of the year, but at $355.80 per share, it is still trading 11.6% below its 52-week high of $402.62 from May 2026. Investors who bought $1,000 worth of Alphabet’s shares 5 years ago would now be looking at an investment worth $2,802.
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