Google's AI strategy comes under fire as Pichai fights back
After delaying Gemini 3.5 Pro, Alphabet's CEO sought to reassure investors that the company can still compete with OpenAI and Anthropic.
Alphabet CEO Sundar Pichai used Wednesday's earnings call to mount a forceful defense of Google's artificial intelligence strategy, pushing back against growing concerns that the company is losing ground to rivals after delaying a flagship AI model and falling behind in AI coding.
Investors have become increasingly uneasy over Google's decision to delay the release of Gemini 3.5 Pro, a model originally expected in June that was seen as critical to strengthening the company's position in AI coding and autonomous "agentic" systems, two of the most fiercely contested areas in generative AI.
The delay has fueled concerns that Google is losing momentum just as OpenAI, Anthropic and a growing number of Chinese competitors accelerate the pace of model releases. During Wednesday's earnings call, Pichai adopted an unusually defensive tone as analysts repeatedly questioned the competitiveness of Google's frontier AI models and whether the company could maintain its position at the industry's cutting edge.
"We've had clearly frontier models. There are many attributes on which we are still at the frontier; there are areas where we've acknowledged we need to improve, and coding and agentic coding is an example of that," Pichai said in response to JPMorgan analyst Doug Anmuth, who questioned whether Gemini could remain competitive and pointed to Google's slower model release schedule.
Rather than focus on the delay of Gemini 3.5 Pro, Pichai repeatedly emphasized Gemini Flash, Google's lower-cost, faster model that now powers a growing range of applications, including cybersecurity, customer service, data analytics and enterprise software.
He highlighted the release of Gemini 3.6 Flash earlier this week, saying the model improved by more than 10 points on a coding benchmark compared with its predecessor while using fewer tokens. Google also introduced Gemini 3.5 Flash-Lite and Flash Cyber, a cybersecurity-focused version of the model, while keeping Gemini 3.5 Pro in partner testing.
"I think people will be pleased" when Google unveils Gemini 4, Pichai said, describing it as a "very ambitious effort." He added that Google is training a significantly larger model designed to compete at the frontier of AI and said the company remains "very committed and very confident" about maintaining its leadership.
When Barclays analyst Ross Sandler raised similar concerns about Google's release cadence, Pichai revealed that the Gemini 4 roadmap envisions launching new models "almost at a monthly cadence."
Pichai's unusually robust defense reflects a growing challenge for Google: convincing investors to judge its AI strategy not by the delay of a single flagship model, but by the scale of an ecosystem that spans cloud infrastructure, custom AI chips and a portfolio of Gemini models integrated across its products and services.
Although Alphabet reported another quarter of exceptional cloud growth, with Google Cloud revenue rising 82%, well above analysts' average expectation of 64%, Wall Street is increasingly focused on whether the company can regain leadership in AI coding and advanced reasoning as competitors continue to move quickly.
At the same time, Alphabet raised its capital expenditure forecast by $15 billion, to $195 billion-$205 billion, underscoring its willingness to spend aggressively to compete in AI.
Despite the strong financial results, Alphabet shares fell more than 3% in after-hours trading. Concerns over Gemini's delays, combined with several high-profile executive departures, have left the stock down about 9% since the end of April.
