Gemini Delay Puts Alphabet Under Investor Spotlight
Synopsis
Alphabet is expected to report strong second-quarter earnings, but investors are closely watching the Gemini AI delay, rising AI investments, and continued cloud business growth.
Key Highlights
- Alphabet delayed the launch of its Gemini 3.5 Pro AI model, sparking questions about AI strategy.
- Investors are watching closely whether the company's high AI investments pay off.
- Alphabet is forecast to report US$116.93 billion in second-quarter revenue, a 21.3% increase on the same period last year.
Alphabet is under closer examination from investors after postponing the release of its flagship Gemini 3.5 Pro AI model while continuing to pour large funding into its AI infrastructure plans.
Earnings from the Google parent company are due on Wednesday and investors will be looking for signs that its huge investments into AI and data centres are delivering.
Gemini Delay Raises AI Concerns
The Gemini 3.5 Pro launch from Alphabet was expected in June. This model is aimed at participating in the accelerated field for artificial intelligence programming tools and autonomous AI systems.
The delay comes at a time of intensifying competition from Chinese open-source AI models and concerns over the rising cost of developing the systems. But despite the hit, analysts say Google is better positioned as a holistic AI ecosystem with its consumer platforms, cloud business, AI models and custom AI chips.
Heavy AI Spending Under Spotlight
In April, Alphabet raised its guidance for 2026 capital expenditure to US$180 billion to US$190 billion. It also announced plans to generate approximately US$85 billion through equity offerings, both via an investment from Berkshire Hathaway.
Alphabet’s stock has fallen roughly 9% since April, even as the company reported last quarter a 63% increase in cloud sales. It still leaves the stock nearly 13% higher for the year, though.
Cloud Business to Accelerate Growth
Analysts see Alphabet’s Q2 revenue soaring 21.3% to US$116.93 billion, according to data from LSEG.
Cloud revenue is projected to rise about 64% and advertising revenue would increase 137%. The cloud business has been supported by increased demand for Google’s custom AI chips, such as multi-billion-dollar contracts with Meta Platforms and Anthropic.
Source: Reuters
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