Alphabet is facing increasing investor pressure as it approaches the release of its second-quarter results. This pressure is compounded by the postponement of a strategic artificial intelligence (AI) model launch, adding to concerns about the return on large investments made in data center infrastructure.
Performance and Innovation Context
This scenario contrasts with the optimism of previous months, when the company exceeded expectations thanks to the solid performance of its cloud computing unit. Google's parent company will present its second-quarter financial figures on Wednesday, the 22nd. One of the market's biggest points of interest is the delay of Gemini 3.5 Pro, which was set to be the company's next major AI model.
Originally scheduled for June, this model aimed to strengthen Alphabet's position in the agentic AI applications and AI-powered programming tools market. However, the company managed to alleviate some of this apprehension on Tuesday, the 21st, by releasing other updates for Gemini.
Competition and AI Costs
The delay of Gemini 3.5 Pro occurs at a time of intensifying competition, as Chinese open models are gaining ground against major US-based laboratories in the race for clients. Additionally, there are growing fears about the high costs inherent in AI development, raising suspicions that large technology corporations may be investing in capacity exceeding future demand.
Dave Wagner, portfolio manager at Aptus Capital Advisors, commented to Reuters that while Google might be falling behind in AI programming—which he considers a real and growing concern—Google's strategy is entirely focused on its ecosystem.
Investments and Stock Performance
In April, Alphabet revised upward its capital investment projections for 2026, estimating expenses between US$ 180 billion and US$ 190 billion. Concurrently, the company announced plans to raise about US$ 85 billion through stock offerings, including an investment from Berkshire Hathaway.
Since the end of April, Alphabet's shares have fallen by approximately 9%, a period during which the company had achieved 63% growth in sales of its cloud division. Due to this performance, the stocks lagged behind other companies in the group known as 'The Magnificent Seven.'
In addition to financial pressure and recent stock movements, the company has also lost important talent to competitors. Among these professionals are Noam Shazeer, co-lead of the Gemini project, and John Jumper, a Nobel laureate and considered a key executive at Google DeepMind.
Despite these obstacles, analysts point out that Alphabet's main competitive advantage in the AI race lies in its vast consumer-facing distribution network, combined with its AI models, cloud computing infrastructure, and proprietary chips.
Looking at the full year of 2026, the company's shares still show an appreciation close to 13%, positioning Alphabet as the second best-performing company among the members of 'The Magnificent Seven.'
Second Quarter Revenue Projections
For the second quarter, analysts predict only a modest slowdown in revenue growth compared to the first three months of 2026, keeping the cloud division as the main driver of results.
According to data compiled by LSEG, Alphabet is expected to generate US$ 116.9 billion (R$ 594.7 billion) between April and June, representing a 21.3% increase compared to the same period last year. The forecast also indicates that cloud computing division sales should maintain an expansion rate of 64%, while advertising revenue growth should be more contained, at 13.7%.
The strong performance of the cloud sector has been driven by the expansion of contracts related to Google's custom AI chips, including multi-million dollar deals closed with Meta and Anthropic.