Alphabet shares fell 4% on Thursday following a Bloomberg report that the company has delayed its Gemini 3.5 Pro artificial intelligence model by several months. The delay stems from performance issues, particularly in coding capabilities that fell short of internal expectations, according to sources cited by Bloomberg. The setback comes as rivals OpenAI and Meta have recently released new AI models that outperform Google's current offerings in software code generation, intensifying competition in the AI development race.
Gemini 3.5 Pro Faces Coding Performance Shortfall
The search giant's Gemini 3.5 Pro AI model is months behind schedule due to efforts to improve its performance, Bloomberg reported citing sources familiar with the matter. The model's coding capabilities were specifically short of internal expectations.
The company announced the Gemini 3.5 Pro AI model in May at its annual Google I/O developer conference, stating at the time that it was being used internally but wouldn't be ready for broader rollout until the following month.
OpenAI and Meta Release Competing AI Coding Models
Meta debuted last week its Muse Spark 1.1 AI model, which the company's AI chief Alexandr Wang described as the social media giant's "strongest model for agentic and coding work yet."
OpenAI last week released its GPT-5.6 Sol AI model, which CEO Sam Altman said is 54% more token efficient on agentic coding tasks. The announcement underscored how AI labs are pitching their respective AI coding models as cost-effective relative to their performance.
Code-generation has become one of the biggest use cases for AI model providers like Anthropic and OpenAI, as well as Chinese AI labs like Z.ai that offer so-called open-weight variants that developers can access for free via the open-source ecosystem.
Alphabet Confirms Testing Phase with Partners
An Alphabet spokesperson told CNBC in an emailed statement that the company is "shipping quickly across a wide range of models while keeping them highly cost-effective for customers."
"We're currently testing 3.5 Pro, an upgraded Flash model, and other models with partners, and we're productively engaged with the U.S. government," the spokesperson said.
FAQ
Why did Alphabet stocks fall on Thursday?
Alphabet shares fell 4% on Thursday following a Bloomberg report that the company has delayed its Gemini 3.5 Pro AI model by several months due to performance issues, particularly in coding capabilities that fell short of internal expectations.
When did Google announce the Gemini 3.5 Pro model?
Google announced the Gemini 3.5 Pro AI model in May at its annual Google I/O developer conference, stating it was being used internally but wouldn't be ready for broader rollout until the following month.
What did Alphabet say about the Gemini 3.5 Pro delay?
An Alphabet spokesperson stated the company is "shipping quickly across a wide range of models" and is "currently testing 3.5 Pro, an upgraded Flash model, and other models with partners" while maintaining productive engagement with the U.S. government.
