Google promised to release its flagship Gemini 3.5 Pro artificial intelligence model in June, but the company still hasn't shipped it as of mid-July. The delay, first reported by Bloomberg, stems from Google's efforts to improve the model's coding capabilities, raising questions about whether the search giant is losing ground to competitors like OpenAI and Anthropic in the race to build the most capable AI systems.

The timeline matters because Google has been moving quickly with its Gemini releases. The company launched Gemini 3 in late 2025, followed by the announcement of Gemini 3.5 Flash at its I/O developer conference in May. The Pro version was supposed to follow a month later. Instead, Google updated the training data for Gemini in an attempt to strengthen its coding skills, and the results disappointed the team internally.

"We're currently testing 3.5 Pro, an upgraded Flash model, and other models with partners," Google stated, adding that it is "shipping quickly across a wide range of models while keeping them highly cost-effective for customers."

Google, Official Statement

Why Does Coding Performance Matter So Much?

Coding has become the main battleground for AI labs right now, and it's a significant part of what enterprise customers pay for when they adopt these systems. A flagship model that can't yet meet Google's own internal standards for coding is an uncomfortable position for the company to occupy while rivals continue to release new versions. The stakes extend beyond a single product launch; Alphabet is investing up to $190 billion in capital expenditures this year, much of it directed toward the infrastructure supporting its AI push.

That level of spending assumes Gemini remains competitive at the frontier of AI capabilities. A one-month delay might seem like noise, but a pattern of slipping models would signal a more serious problem for investors betting on Google's AI dominance.

Is Google Actually Falling Behind in AI?

Despite the delay, Google's business results suggest customers haven't been waiting on Gemini 3.5 Pro before signing contracts. Alphabet's revenue climbed 22 percent year over year to $109.9 billion in the first quarter, marking 11 consecutive quarters of double-digit growth. Google Cloud revenue jumped 63 percent year over year to $20.0 billion, accelerating from 48 percent growth in the prior quarter.

The cloud segment's operating income roughly tripled year over year to $6.6 billion, and Google Search and other revenue rose 19 percent, with management noting that search queries hit an all-time high. Demand for Gemini itself appears robust, with CEO Sundar Pichai reporting that the company's cloud backlog nearly doubled from the prior quarter to over $460 billion.

"Our AI investments and full stack approach are lighting up every part of the business," Pichai said in the company's first-quarter earnings release.

Sundar Pichai, CEO of Alphabet

Perhaps most tellingly, Pichai disclosed that Gemini models were processing over 16 billion tokens per minute through direct customer use, up 60 percent in three months. A token is a small unit of text that AI models process; this metric shows how heavily customers are already using Google's AI systems.

How to Monitor Google's AI Competitive Position

• Watch Cloud Revenue Growth: Google Cloud's acceleration from 34 percent growth in Q3 2025 to 63 percent in Q1 2026 demonstrates strong enterprise demand. Future quarterly reports will reveal whether this momentum continues or slows.
• Track Model Release Timing: Pay attention to when Gemini 3.5 Pro finally launches and whether subsequent models arrive on schedule. A single delay is manageable; repeated delays would signal deeper competitive problems.
• Monitor Token Processing Volume: The 60 percent quarterly increase in token processing shows customer adoption is accelerating. Sustained growth in this metric indicates Gemini remains competitive despite the delay.
• Follow Earnings Guidance: Alphabet is scheduled to report second-quarter results on July 22, providing fresh data on cloud growth and any new timelines for Gemini 3.5 Pro.

Alphabet's stock has declined about 15 percent from its peak of $408.61 earlier in the year, closing at $346.77 as of the reporting date. The company trades at approximately 25 times forward earnings, a valuation that assumes growth rates remain robust. If Gemini were to fall a full generation behind OpenAI and Anthropic, the AI demand filling that cloud backlog could become harder to defend, and the AI features now driving search usage could start to lag rivals.

However, one late model doesn't appear to push Alphabet anywhere close to that scenario yet. The company's strong financial results and customer adoption metrics suggest the delay, while notable, hasn't fundamentally altered the investment case. Still, it's a risk worth watching closely as the competitive AI landscape continues to shift rapidly.