Alphabet Inc. (GOOGL) is moving to rebuild investor confidence after a bruising summer, pairing a new AI model launch with a major federal antitrust victory.
Google has introduced Gemini 3.8 Flash, internally codenamed “Skimaki,” with a launch expected as soon as Wednesday. The model is specifically designed to improve Google’s coding performance, an area where Gemini has fallen behind competitors. In internal tests using the Jetski coding tool, Google engineers preferred Gemini 3.8 Flash over Anthropic’s Opus. The company also launched Gemini 3.8 Flash Cyber, a security-focused model for verified corporate and public-sector networks, available through the new Fairwind Program. Google says the security variant can outperform previous Flash Cyber models and much larger flagship systems at autonomously finding software bugs.
Alphabet’s stock response has been modest but positive. GOOGL rose 0.6% in after-hours trading Tuesday after The Wall Street Journal reported the pending launch, then traded modestly higher again Wednesday, helping to pare a 1% slide. The shares are up about 8% year-to-date, trailing the S&P 500’s 12.7% gain.
Underlying financial performance remains robust. Google Cloud revenue surged 82% year-over-year to $24.8 billion in the second quarter, with operating income of $8.8 billion and an operating margin of 35.6%. Cloud backlog climbed more than $50 billion sequentially to $514 billion. Total Google advertising revenue rose 14% to $81.6 billion, while Search and other advertising revenue increased 17% to $63.3 billion.
On the legal front, U.S. District Judge Leonie Brinkema rejected the Department of Justice’s demand that Google divest its advertising exchange. Instead, she favored behavioral remedies that could require data sharing and interoperability with competing services. The decision represents another setback for structural-breakup efforts against large technology firms. Alphabet still faces questions about whether its heavy AI spending will translate into sustained revenue growth, but analysts rate GOOGL a Strong Buy with an average price target around $426.
D.A. Davidson analyst Gil Luria said: “From a product perspective, this model seems to keep Google in the race, but probably won’t change the fact that they are a distant third in the enterprise market.”
