Alphabet is under pressure from two sides: concerns about its new AI model and new competition from a Chinese company.
Alphabet’s stock fell 2.3% on Friday, following a drop of over 4% the day before.
The first issue is with Gemini 3.5 Pro, Alphabet’s new AI model, which seems to have missed its planned June launch. According to Bloomberg, internal tests last month showed the model did not meet expectations in areas like coding. A Google spokesperson said the company is releasing many models quickly and keeping costs down. Gemini 3.5 Pro and an improved Flash model are being tested with partners, and Google is still working with the U.S. government on model testing and broader AI guidelines.
This comes at a tough time, as the AI field is more competitive than ever. The second challenge is from China’s Moonshot AI, which announced on Friday that its Kimi K3 model can beat some top U.S. systems. Early tests by the independent firm Artificial Analysis seem to back this up, ranking K3 above all of Google’s models for intelligence. However, the Chinese model costs more per task than Gemini 3.5 Flash.
A market strategist at Zacks Investment Management said the news shows how fast and competitive the AI market is. However, high token costs may slow adoption. The strategist compared it to a high-performance car that gets attention but has few buyers because of the price.
Still, Alphabet faces growing pressure to launch a strong AI model. The company will report earnings next Wednesday, and if it increases AI spending without showing better results, investors may react negatively.
