Alphabet (GOOGL) shares finished Friday’s session at $354.46, retreating approximately 4.44% from the opening price near $373. The catalyst: emerging reports indicating Google’s Gemini 3.5 Pro artificial intelligence model experienced delays after underperforming against internal quality standards.
The downturn occurred despite Alphabet delivering one of its most impressive quarterly performances in recent memory. First quarter FY2026 earnings per share registered at $5.11, nearly doubling the Wall Street consensus of $2.63 — representing a remarkable 94% earnings surprise. Total revenue reached $109.90 billion, marking a 21.8% year-over-year increase.
Google Cloud emerged as the quarter’s star performer, surging 63% to $20.03 billion while its project backlog nearly doubled sequentially. The current backlog now totals $460 billion.
Concerns around AI talent retention amplified selling pressure. Gemini co-leader Noam Shazeer recently moved back to OpenAI after a short stint at Google following the Character.ai transaction. Nobel Prize winner John Jumper also left DeepMind to join Anthropic. These high-profile departures sparked worries about Google’s competitive position in artificial intelligence development.
Despite market reaction, Wall Street analysts maintained their confidence.
Wedbush analyst Ygal Arounian launched coverage Thursday with a Buy recommendation and a $671 price objective — marking the highest target among major firms. Arounian characterized the postponement as a “temporary blip” and positioned the market reaction as an attractive buying opportunity.
Reaching $671 would translate to nearly 90% appreciation from present trading levels.
BMO Capital’s top-rated analyst Brian Pitz maintained his conviction as well. He kept his Buy stance while increasing his price objective to $455 from $435, referencing upgraded Google Cloud projections for Q4 and full-year FY2027, up 2% and 13% respectively. Pitz highlighted expanding infrastructure capacity and sustained cloud adoption as drivers behind his revised outlook.
The average analyst price target stands at $437.79, suggesting approximately 26% upside potential from Friday’s closing level. One optimistic forecast of $515 indicates possible gains of 45%.
Friday’s weakness extended beyond Alphabet alone. Technology stocks broadly retreated, with AI-focused companies experiencing the sharpest declines. META decreased 3.19%, MSFT fell 2.14%, and NVDA declined 1.17%. GOOGL’s more pronounced drop suggests the Gemini news provided additional downward momentum.
Warren Buffett, now operating alongside successor Greg Abel, disclosed that Berkshire Hathaway established an Alphabet position via a $10 billion private placement. Buffett identified artificial intelligence infrastructure spending as a primary risk factor — Alphabet’s capital expenditures reduced free cash flow by 46.63% year-over-year in Q1.
Friday’s trading volume registered 10.79 million shares, significantly below the three-month daily average of 34.05 million.
Despite the session’s decline, GOOGL maintains an 11.11% gain year-to-date and has appreciated 91.54% over the trailing twelve months.
Among 64 analysts covering the stock: 14 rate Strong Buy, 43 rate Buy, 7 rate Hold, with zero Sell recommendations.
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