NEW YORK, July 16, 2026, 16:08 (EDT) – Alphabet NASDAQ:GOOGL erased about $200 billion in market capitalization after news surfaced of a delay to the rollout of its Gemini 3.5 Pro AI system.
Shares of Alphabet NASDAQ:GOOGL slipped 4.4% on Thursday, ending the session at an unofficial $354.46. The decline came after reports indicated Gemini 3.5 Pro faced delays of several months. Initial estimates suggest the market value drop is around $199 billion.
The preliminary loss surpassed Alphabet’s projected 2026 capital expenditures, which are forecast at $180 billion to $190 billion. The magnitude indicates investors are lowering their expectations for returns from the company’s AI expansion.
The schedule puts added pressure on results due July 22. Investors want to see evidence that significant expenses are turning into timely product launches and accelerating cloud revenue.
According to Bloomberg, the model fell short of internal targets, notably in coding, citing information from 10 present and past employees. Chief Executive Sundar Pichai previously stated the model would launch in June.
Google announced it is trialing 3.5 Pro and additional models in collaboration with partners. The company stated that launches are continuing at a swift pace and with a focus on cost efficiency.
The decline outpaced drops seen in comparable AI and cloud sector peers.
| Company | Estimated change on July 16 |
|---|---|
| Alphabet NASDAQ:GOOGL | -4.4% |
| Microsoft NASDAQ:MSFT | +1.2% |
| Meta Platforms NASDAQ:META | -2.6% |
| Amazon.com NASDAQ:AMZN | -2.2% |
U.S. cash markets did not operate. Peer movements are based on rounded late-session quotations; Alphabet is marked to the unofficial closing price.
The Nasdaq slipped 1.5% and the S&P 500 dropped 0.5%. Alphabet’s steeper drop highlights an additional worry over execution.
Alphabet reported solid operating results for the quarter, with first-quarter revenue increasing by 22%. Cloud sales surged 63% to reach $20 billion.
Cloud reported an operating margin of 32.9%, with its backlog amounting to $462 billion.
Alphabet CFO Anat Ashkenazi reported “unprecedented internal and external demand for AI compute resources.” She raised spending guidance for 2026 to a range of $180 billion to $190 billion. Alphabet Investor Relations
Capital expenditure for the first quarter reached $35.7 billion, while free cash flow totaled $10.1 billion. Thursday’s initial decline in value amounted to roughly 5.6 times the quarterly capital outlay.
The stock ended the session 0.8% lower than its July 10 close. Thursday’s drop wiped out nearly all of the gains from a two-day rally that lasted through Wednesday.
Alphabet will release its second-quarter results on Wednesday, July 22. The market will be monitoring Cloud division growth, updates on model rollout, and projections for spending through 2027.
Risks: The selloff could be undone by a rapid model launch or another robust Cloud quarter. However, further declines or increased expenditure may put additional strain on the valuation.
