Alphabet shares dropped more than 4% on Tuesday after the company delayed the launch of its next-generation AI model, Gemini 3.5. The setback comes as investors grow uneasy about the tech giant's spending plans, which include a capital expenditure of $180-190 billion.
The Gemini 3.5 Delay
Alphabet had been expected to release Gemini 3.5 in the coming weeks, but the company pushed back the timeline without giving a new date. The delay was confirmed internally, though Alphabet did not provide a public reason. The move surprised analysts who had been tracking the model's development closely.
Gemini 3.5 was seen as a critical product for Alphabet to maintain its competitive edge in the AI race. Rivals like OpenAI and Microsoft have been rolling out updates faster, putting pressure on Google's cloud and search businesses. The delay raises questions about whether Alphabet can keep pace.
Investor Scrutiny of AI Spending
Alphabet's capital expenditure plans — between $180 billion and $190 billion — are among the largest in the tech sector. Much of that money is going into AI infrastructure, including data centers and custom chips. But with Gemini 3.5 delayed, some investors are asking whether that spending is paying off.
The stock drop reflects that unease. Alphabet shares closed down 4.2% on the day, wiping out billions in market value. The company has not commented on whether the delay will affect its overall AI roadmap or the budget for future models.
Earnings Due July 22
Alphabet is scheduled to report second-quarter earnings on July 22. That call will be the first chance for investors to hear directly from executives about the Gemini delay and the company's AI strategy. Analysts expect questions about the timeline for Gemini 3.5 and whether the capital expenditure plans might be revised.
The earnings report will also cover Alphabet's core advertising business, which has been recovering. But the AI narrative is likely to dominate the conversation. Investors want to know if the spending is producing results — and if not, what Alphabet plans to do about it.
For now, the market is waiting. The July 22 call will be the next big test for Alphabet's AI story.
