Key Highlights
- Google plans to unveil Gemini 3.8 Flash, internally known as “Skimaki,” potentially by Wednesday, featuring enhanced coding performance.
- GOOGL shares climbed 0.6% during after-hours trading Tuesday following reports of the model’s imminent release.
- Internal evaluations showed Google engineers favoring Gemini 3.8 Flash over Anthropic’s Opus when tested with the Jetski evaluation tool.
- Google Cloud posted an 82% revenue jump to $24.8 billion in Q2, while the backlog reached $514 billion.
- Analysts maintain a Strong Buy consensus on GOOGL with an average price target near $426, suggesting approximately 26-27% potential upside.
Shares of Alphabet’s GOOGL climbed 0.6% during after-hours trading Tuesday following a Wall Street Journal report revealing that Google is on the verge of introducing a new artificial intelligence model dubbed Gemini 3.8 Flash. The shares had ended the regular trading session down approximately 1.3%.
Known internally as “Skimaki,” the model may debut as early as Wednesday. Its primary focus is enhancing Google’s coding performance, a domain where Gemini has recently lagged behind competitors including Anthropic and OpenAI.
Flash variants are engineered to operate with greater speed and reduced costs compared to Google’s most sophisticated AI systems. While they don’t match the capabilities of Google’s premium models featuring trillions of parameters, they prioritize rapid performance and resource efficiency.
During internal assessments, Google’s engineering team utilized an evaluation framework called Jetski for comparative analysis. Results showed engineers consistently preferring Gemini 3.8 Flash over Anthropic’s Opus model, representing a significant achievement considering the intense competition within AI-powered coding.
Throughout this year, Google has allocated additional research resources and computational power toward coding applications. The company has simultaneously expanded its implementation of reinforcement learning techniques, where AI systems enhance their performance through repeated task execution and error correction.
Google’s AI Leadership Diminished Following Brief 2026 Advantage
Google made significant progress in the AI competition after introducing Gemini 3.0 in November 2025, temporarily surpassing several rivals. However, this advantage didn’t last long. Throughout 2026, Gemini slipped behind newer releases from both Anthropic and OpenAI.
The competitive pressure is intensifying as AI-driven coding assistants become one of the technology’s most valuable commercial applications. While the 3.8 Flash release could strengthen Google’s competitive standing, industry observers don’t anticipate it will immediately restore the company’s market leadership.
GOOGL shares have advanced approximately 8% year-to-date, underperforming the S&P 500’s 12.7% increase during the identical timeframe.
Alphabet’s Core Operations and Cloud Division Deliver Robust Results
Beyond the AI model competition, Alphabet’s fundamental business operations have demonstrated solid performance. Google Search combined with other advertising segments generated 17% year-over-year growth, reaching $63.3 billion in Q2. Consolidated Google advertising revenue totaled $81.6 billion, representing a 14% increase.
Google Cloud delivered exceptional quarterly results. Revenue soared 82% to $24.8 billion, while operating income hit $8.8 billion, exceeding the prior year’s figure by more than threefold. Operating margin expanded significantly to 35.6% from 20.7%.
The Cloud division’s backlog grew by over $50 billion quarter-over-quarter, reaching $514 billion. Management anticipates converting slightly more than 50% of this backlog into recognized revenue within the coming 24 months.
Subscription services also contributed positively, with the Subscriptions, Platforms, and Devices segment posting 15% year-over-year growth to $12.9 billion in Q2, propelled by YouTube Music, YouTube Premium, and Google One offerings.
Currently, twenty-eight Wall Street analysts maintain a Strong Buy rating on GOOGL, consisting of 23 Buy recommendations and five Hold ratings. The consensus price target stands at approximately $426, indicating potential upside of roughly 26-27% from present trading levels.
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