Pichai Defends Google's AI Progress Amid Model Delays and Investor Concerns

Alphabet CEO Sundar Pichai mounted a robust defense of Google's artificial intelligence strategy during a Wednesday earnings call, pushing back against investor concerns that the company is losing ground to rivals. The comments came as shares fell more than 3% in after-hours trading, reflecting market anxiety over the pace of Google's AI development.

Addressing Model Delays

Investor unease has grown following Google's decision to delay the release of Gemini 3.5 Pro, a flagship model anticipated to advance the company's capabilities in AI-powered coding and autonomous "agent" tasks. The delay has fueled perceptions that competitors like OpenAI and Anthropic are accelerating their model releases while Google loses momentum.

Pressed by analysts on the competitiveness of Google's frontier models, Pichai acknowledged areas needing improvement. "We’ve had clearly frontier models... there are areas where we’ve acknowledged we need to improve and coding and agentic coding is an example of that," he stated in response to a question from JPMorgan analyst Doug Anmuth.

Shifting Focus to a Broader Ecosystem

Instead of focusing on the delayed model, Pichai directed attention to the wider Gemini ecosystem, emphasizing the company's faster, more cost-effective "workhorse" models. He highlighted several recent releases and upcoming plans:

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• The new Gemini 3.6 Flash, which he said improved by over 10 points on a key coding benchmark.
• The recent unveiling of Gemini 3.5 Flash-Lite and a cybersecurity-focused Flash Cyber model.
• A preview of the upcoming Gemini 4, which he described as a "very ambitious effort" and a significantly larger model designed to compete at the industry's frontier.

Pichai also disclosed that the roadmap for Gemini 4 includes rolling out new models on "almost at a monthly cadence," signaling an accelerated pace of development.

Soaring Costs and Market Reaction

While Google reported strong cloud division growth of 82%, Wall Street remains focused on the company's AI leadership and the immense costs involved. Alphabet announced it was raising its capital expenditure plans by $15 billion to a range of $195 billion to $205 billion for the year, underscoring the massive investment required for the AI race.

Concerns over the Gemini delays, coupled with recent high-profile executive departures, have weighed on the company's stock. Shares of Alphabet have fallen approximately 9% since the end of April, indicating that investors are looking for more definitive signs that Google can maintain its position at the cutting edge of AI innovation.