EXPOSED: Alphabet Loses $200 Billion As Gemini 3.5 Pro Falls Behind Schedule

2026-07-17 · Source: AIM Network · Field: Technology & Digital — Artificial Intelligence & Machine Learning, Emerging Technologies & Innovation · Depth: Fundamental Awareness, short

Summary

Alphabet's market value decreased by approximately \$200 billion, with its stock dropping 4.4% following a Bloomberg report indicating Google's Gemini 3.5 Pro AI model is months behind schedule. Unveiled in May with an expected June rollout, the model remains unreleased in mid-July due to coding performance issues that reportedly fall short of internal expectations. This delay has caused internal frustration among Google engineers and managers, who fear losing ground to competitors like Anthropic and OpenAI, especially as enterprise customers sign multi-year contracts with OpenAI and Microsoft. The AI landscape is highly competitive, with Meta launching Spark 1.1 and OpenAI introducing GPT-5.6, branded Soul AI, which claims a 54% jump in token processing efficiency for programming tasks. Alphabet maintains it is shipping new models quickly and focusing on cost competitiveness, despite its stock gradually sliding since May.

Key takeaway

For Directors of AI/ML evaluating foundational models, Google's Gemini 3.5 Pro delay underscores the critical importance of timely delivery and robust performance in the rapidly evolving AI market. Your organization risks locking into multi-year contracts with competitors if you wait for delayed releases. Prioritize vendors demonstrating consistent shipping discipline and proven coding capabilities to ensure your long-term strategic advantage.

Key insights

Google's Gemini 3.5 Pro delay due to coding performance allows rivals to secure enterprise customers.

Principles

• Speed and shipping discipline are crucial in competitive AI markets.
• Delays in AI model releases can lead to significant market value loss.
• Enterprise customer contracts are hard to unwind once signed.

In practice

• Prioritize robust coding performance in AI model development.
• Monitor competitor release schedules and capabilities.
• Secure enterprise contracts early to prevent customer loss.

Topics

• Gemini 3.5 Pro
• AI Model Development
• Coding Performance
• Market Competition
• Enterprise AI Contracts
• Alphabet Stock Performance

Best for: CTO, VP of Engineering/Data, AI Architect, Investor, Director of AI/ML, Executive

Related on AIssential

• Google Gemini Launch Delayed as Tech Falls Short of Internal Goals — Key details on Google Gemini's launch delay are inaccessible behind a Bloomberg.com subscription wall.
• Gemini 3.1 Pro Is Google's Greatest Model Ever! Most Powerful AI EVER! (Fully Tested) — Gemini 3.1 Pro significantly advances reasoning and complex task execution, pushing AI towards real-world engineering applications.
• Google Delays Gemini 3.5 Pro to July 17: The Strategic Play Behind the Scrapped Base Model — Frontier AI competition demands generational leaps, not incremental model iterations.
• Sundar Pichai admits Google trails in AI coding — Google acknowledges trailing in AI coding, stressing larger base models and improved agentic capabilities are vital for future competitiveness.
• Gemini 3 Pro: Breakdown — Gemini 3 Pro's record-setting performance across diverse benchmarks signals a significant leap in AI capabilities, driven by massive pre-training scale.
• Google ships three new Gemini Flash models but its frontier 3.5 Pro remains lost in training — Google prioritizes efficiency and specialized AI models while its frontier model lags competitors.

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Editorial summary, takeaway, and curation by AIssential. Original article published by AIM Network.