Alphabet Inc. saw its stock drop approximately 4% following reports that the launch of its Gemini 3.5 Pro model has been delayed due to internal benchmarks not being met. With shares closing at $354.46, this decline is notable as it comes despite a strong earnings report for Q1 FY2026, where earnings per share (EPS) reached $5.11, significantly surpassing the expected $2.63 by 94%. Revenue for the quarter rose 21.8% year-over-year, amounting to $109.90 billion.
The drop in stock price coincided with the departure of key AI talent, including Gemini co-lead Noam Shazeer, who returned to OpenAI. This has raised concerns regarding the future of Google’s AI initiatives, potentially impacting the company’s competitive edge. In contrast, Google Cloud reported impressive growth, with revenue soaring 63% to $20.03 billion, and its backlog nearly doubled to $460 billion quarter-over-quarter.
Despite the setback, analysts remain optimistic. Wedbush analyst Ygal Arounian initiated coverage with a Buy rating and set a price target of $671, the highest on Wall Street, viewing the current dip as a buying opportunity. BMO Capital’s Brian Pitz also maintained a Buy rating and increased his target from $435 to $455, attributing the revision to solid demand and expanding cloud capabilities.
Overall, 64 analysts cover Alphabet, with 57 giving a Buy or Strong Buy rating. The consensus price target stands at $437.79, indicating a potential upside of about 26% from Friday's close. The broader tech sector also faced declines; however, Alphabet's drop was steeper than many peers, suggesting heightened sensitivity to the Gemini news. Warren Buffett's Berkshire Hathaway recently invested $10 billion in Alphabet, emphasizing the importance of AI-related capital expenditures.
This article is for informational purposes only and does not constitute financial advice.
