- Alphabet faces a securities class action over allegations that it failed to adequately disclose delays and development problems involving its Gemini 3.5 Pro AI model.
Alphabet Inc. (NASDAQ: GOOGL) is facing a federal securities class action tied to allegations that the company did not disclose problems affecting the development and expected launch of its Gemini 3.5 Pro artificial intelligence model.
The latest development comes from a notice issued by Faruqi & Faruqi on Oct. 2. The law firm said investors have until Nov. 30, 2026, to seek appointment as lead plaintiff in the litigation.
The allegations have not been proven in court. Faruqi said the complaint alleges that Alphabet and certain executives made materially false or misleading statements, or failed to disclose information, concerning Gemini 3.5 Pro's development and expected launch.
According to the notice, investors who purchased or acquired Alphabet securities between May 19 and July 16, 2026, may be eligible to participate in the action. The firm said investors do not have to seek lead-plaintiff status to potentially remain part of the class. The allegations center on Google's flagship AI model and whether investors were adequately informed about problems that could affect its development timeline.
Lawsuit Centers on Gemini 3.5 Pro Delay
The complaint alleges that Gemini 3.5 Pro was experiencing disappointing training results and that the problems contributed to a significant delay in the model's launch, according to Faruqi's notice. The firm also alleges that Alphabet's positive statements about its business and prospects were misleading because those issues were not disclosed.
The allegations followed a July 16 report from Bloomberg that Google was months behind schedule on Gemini 3.5 Pro. Bloomberg reported that Google had been working to improve the model, particularly its coding capabilities, after changes to its training data produced disappointing results.
Alphabet's Class A shares fell $16.46, or about 4.4%, to close at $354.46 on July 16, according to the Faruqi notice. The decline occurred on unusually heavy trading volume.
The timing of the allegations is significant because Google had presented Gemini 3.5 as an important part of its AI product roadmap. At its May 19 Google I/O event, the company announced Gemini 3.5 alongside other AI products and said Gemini 3.5 Flash was becoming part of its latest generation of models.
Google's own Cloud announcement at the time also said Gemini 3.5 Pro was in testing and expected the model to arrive the following month. The subsequent delay became an investor concern as competition intensified between Google, OpenAI and Anthropic. Reuters reported in July that Google had not provided an official release date for Gemini 3.5 Pro while releasing other models in the Gemini lineup.
Alphabet's broader AI business, however, continued to show growth during the period. In its second-quarter results, the company reported revenue of $119.8 billion, up 24% year over year, while Google Cloud revenue increased 82% to $24.8 billion. Alphabet said the Cloud growth was driven in part by demand for enterprise AI solutions and infrastructure.
That broader performance is an important distinction for investors. The lawsuit concerns alleged disclosure failures surrounding a specific AI model and its development timeline; it does not establish that Alphabet's overall AI business was performing poorly.
What Alphabet Investors Need to Know About the Case
The November deadline concerns the lead-plaintiff process rather than a deadline for ordinary investors to submit a claim for payment. Under the process described by Faruqi, an investor who wants to serve as lead plaintiff must ask the court for that role by Nov. 30. Investors who do not seek that appointment may still remain members of the proposed class, subject to the court's proceedings and any eventual resolution.
The litigation also comes as Alphabet faces a much broader set of legal and regulatory issues. Alphabet disclosed in its latest SEC filings that it is involved in litigation and regulatory matters involving competition, intellectual property, privacy, AI and other areas.
That backdrop makes the Gemini case relevant to investors, but the potential financial impact remains uncertain. Alphabet's filings specifically note that outcomes of outstanding legal matters can be difficult to predict and that some proceedings could result in significant expenses or changes to business practices.
The legal dispute also arrives as Google's AI strategy continues to evolve. Alphabet's valuation remains another consideration for shareholders More recently, Google has moved beyond the delayed Gemini 3.5 Pro roadmap. Reuters reported Sept. 30 that Google introduced its next-generation Gemini 4 model after scrapping plans for a public Gemini 3.5 Pro release.
For now, the securities case remains based on allegations. The court has not determined that Alphabet or its executives violated securities laws, and the litigation's eventual outcome remains unresolved.
For investors, the central issue is whether the plaintiffs can establish that Alphabet's statements or omissions about Gemini 3.5 Pro were materially misleading under federal securities law and caused investor losses. The Nov. 30 lead-plaintiff deadline is the next significant procedural date identified in the Faruqi notice.