MOUNTAIN VIEW, Calif. — According to statements from Google, testing conducted with select enterprise partners, and ongoing engagement with U.S. government AI safety evaluations, Alphabet Inc. is delaying the broader release of Gemini 3.5 Pro, its most advanced artificial intelligence model, after the system reportedly failed to meet internal performance targets, contributing to a sharp decline in the company’s share price as investors reassessed Google’s position in the intensifying AI race.
Alphabet shares fell more than 4% during Thursday’s trading session, wiping out hundreds of billions of dollars in market value before partially recovering. The sell-off followed reports that Gemini 3.5 Pro, originally expected to launch this summer after being introduced at Google I/O, has been pushed back by several months while engineers continue improving its performance, particularly in software coding and advanced reasoning.
The delay comes as competition among leading AI developers continues to intensify. OpenAI, Anthropic, Meta, xAI, and several Chinese AI companies have all introduced increasingly capable models over recent months, raising expectations that technology companies must deliver rapid improvements while keeping computing costs under control.
According to the report, Google’s engineering teams have spent months refining Gemini 3.5 Pro after internal testing found the model did not consistently meet the company’s performance goals in several key benchmarks, including programming assistance. Engineers reportedly updated training data and continued optimization efforts, but additional testing was deemed necessary before a broader public release.
A Google spokesperson said the company continues to move quickly across multiple AI models while emphasizing quality, reliability, and cost efficiency. The company confirmed that Gemini 3.5 Pro, upgraded Flash models, and other systems are currently being tested with partners while discussions continue with the U.S. government regarding advanced AI model evaluation and safety frameworks.
The postponement arrives at a critical time for Alphabet. The company has invested tens of billions of dollars expanding AI infrastructure, custom Tensor Processing Units (TPUs), cloud computing capacity, and generative AI capabilities across Search, Workspace, Android, YouTube, and Google Cloud. Investors increasingly view Gemini as central to Google’s long-term strategy for defending its leadership in internet search while expanding enterprise AI services.
The delay also reflects the growing complexity of developing frontier AI models. As systems become more powerful, developers face increasing technical challenges, including improving reasoning, coding accuracy, safety testing, hallucination reduction, and operational efficiency before releasing products to customers at scale.
Despite the market reaction, Alphabet remains one of the world’s largest AI investors and continues integrating generative AI across virtually every major product line. Analysts note that while the postponement may affect short-term investor sentiment, Google’s enormous cloud infrastructure, proprietary chips, research capabilities, and global user base continue to provide significant long-term competitive advantages.
Investors will now turn their attention to Alphabet’s upcoming earnings report and management’s outlook for AI spending, infrastructure investments, and Gemini deployment timelines. Those updates are expected to provide a clearer picture of whether the latest delay represents a temporary engineering setback or signals broader competitive challenges as the race for AI leadership accelerates.
JBizNews Desk | Mountain View
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