Alphabet’s Gemini delay, spending worries loom over earnings
FILE PHOTO: The Google logo is seen outside the company’s offices in London, Britain, June 24, 2025. REUTERS/Carlos Jasso/File Photo
Read a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST
Tap here to return to FAST
FAST
July 21 : Alphabet faces heightened scrutiny from investors as a delay in the launch of a model key to its AI ambitions adds to worries over the payoff from massive data-center spending, months after raising expectations with a blockbuster quarter for cloud sales.
The Google parent — set to report second-quarter results on Wednesday — has delayed from June the launch of its next flagship model, Gemini 3.5 Pro, built especially to catch up with rivals in the lucrative market for AI coding tools and agentic AI tasks.
The setback has raised concerns as Chinese open-source models increasingly challenge top U.S. labs for customers amid growing worries about steep AI bills that have also fanned fears that Big Tech could be over-building capacity.
“While Google is missing the boat on AI coding and that’s a very real growing concern … Google’s strategy is all about the ecosystem,” said Dave Wagner, portfolio manager at Aptus Capital Advisors.
Guess Word
Crack the word, one row at a time
Buzzword
Create words using the given letters
Mini Sudoku
Tiny puzzle, mighty brain teaser
Mini Crossword
Small grid, big challenge
Word Search
Spot as many words as you can
Alphabet increased its 2026 capital expenditure guidance to between $180 billion and $190 billion in April and has announced plans to raise about $85 billion in equity offerings, including an investment from Berkshire Hathaway.
Alphabet shares are down about 9 per cent since late April — when it posted a 63 per cent jump in cloud sales — lagging other so-called “Magnificent Seven” stocks during the period.
The company has also lost high-profile employees, including Gemini co-lead Noam Shazeer and Nobel laureate John Jumper, a key Google DeepMind executive, to rivals.
Analysts have said Google’s advantage in the AI race lies in its ownership of a large consumer distribution network, on top of its AI models, cloud infrastructure and custom silicon.
Overall, Alphabet shares remain nearly 13 per cent higher for the year, making it the second-best performer among the Mag 7 group.
Analysts expect the company’s second-quarter revenue growth to ease only slightly from the first three months of 2026, as the cloud business drives results.
Alphabet is expected to post a 21.3 per cent rise in revenue for the April-June period to $116.93 billion, according to data compiled by LSEG. Cloud sales are estimated to grow at a similar 64 per cent pace, while ad revenue is forecast to expand at a slower 13.7 per cent.
The cloud business has benefited from growing deals for Google’s custom AI chip business, including multi-billion-dollar agreements with Meta Platforms and Anthropic.
Source: Reuters
Sign up for our newsletters
Get the CNA app
Stay updated with notifications for breaking news and our best stories
Get WhatsApp alerts
Join our channel for the top reads for the day on your preferred chat app
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST
Tap here to return to FAST
FAST
About The Author
