Google's AI Doubters Got a Direct Answer
Sundar Pichai spent Alphabet’s Wednesday earnings call doing something he is not used to doing: arguing that Google is not falling behind in AI. Analysts pressed him on the delayed Gemini Pro model and whether Google had ceded the frontier to OpenAI and Anthropic.
“We’ve had clearly frontier models,” Pichai said. “There are many attributes on which we are still at the frontier; there are areas where we need to improve, and coding and agentic coding is an example of that.”
The admission was unusually candid for a company that invented the transformer architecture. The next Gemini Pro is months behind schedule, and coding is exactly where OpenAI’s Codex and Anthropic’s Claude have been peeling off developers.
Cloud Revenue Surges 82%, But Spending Spooks Markets
Alphabet posted revenue of $119.8 billion for the quarter, up 24% year-over-year. Google Cloud grew 82% to $24.8 billion, comfortably ahead of the roughly 64% analysts had pencilled in. The cloud backlog reached $514 billion.
Yet shares fell more than 3% after hours. The culprit: capital expenditure guidance. Alphabet lifted its 2026 capex guidance by about $15 billion, to between $195 billion and $205 billion, and management signalled the bill would climb again in 2027. The message was that the constraint is chips and data centers, not demand.
Gemini Usage Numbers Are Impressive
Pichai leaned on demand as evidence that doubters have it wrong. Gemini models now process 22 billion API tokens a minute. Nearly 500 cloud customers have each run more than a trillion tokens over the past year. The Gemini app hit 950 million monthly active users, with daily active users tripling over the past year. Nearly 90% of the Fortune 100 now run Gemini Enterprise.
Google’s full-stack bet — from custom chips (TPUs) to models to agents — is the narrative Pichai wants investors to read. He also revealed that Google has begun its most ambitious pre-training run yet for Gemini 4, and signalled that future models would arrive at close to a monthly cadence.
The Coding Gap Remains
The concession on coding was the tell. A year ago, Google was beating estimates and closing on Nvidia as the most valuable company in the world. Now its CEO is answering questions about whether it can keep pace. The next Gemini, whenever it ships, will have to make his case for him.
For developers, the practical takeaway is that Google’s AI offerings are deeply integrated into its cloud platform, but if you need cutting-edge coding assistance today, OpenAI’s Codex and Anthropic’s Claude are ahead. Google has acknowledged this and is investing heavily to catch up.
Net Income Swelled by Anthropic Stake
Net income came in at a startling $112.1 billion, though most of that was an accounting mirage. Around $80 billion was an unrealized gain on Alphabet’s stake of roughly 14% in Anthropic, whose valuation tripled during the quarter. This highlights Google’s strategic investment in a competitor — a hedge against its own internal delays.
What This Means for Developers
If you’re building on Google Cloud, the infrastructure is there and growing fast. The Gemini API is handling massive throughput, and the enterprise adoption is real. But if you’re evaluating AI coding assistants, you’ll find better options outside Google for now. Expect Google to close that gap with more frequent model releases and a focus on agentic coding.
Pichai’s message to investors was that the constraint is supply, not demand. For developers, that means more capacity and lower latency ahead — but also that Google is still playing catch-up on the coding front.
