On August 13, Alphabet’s (NASDAQ:GOOGL) Google unveiled Gemini 3.7 Flash, a brand new AI mannequin constructed for coding and automatic enterprise duties. The launch got here with out phrase on when the corporate’s flagship Gemini 3.5 Professional mannequin will arrive, a spot buyers have watched intently as a gauge of whether or not Google’s DeepMind unit can preserve tempo with Anthropic and OpenAI. It additionally landed the identical week that Alphabet closed a $25 billion bond sale and posted its first-ever damaging free money circulate quarter.
Bull Case: A Cheaper, Quicker Gemini
Gemini 3.7 Flash arrived simply three weeks after Gemini 3.6 Flash, a tempo that alerts Google is iterating shortly on the fashions it hopes will energy autonomous AI brokers. The brand new mannequin targets companies constructing techniques that may plan duties, use software program instruments, and full multi-step workflows with much less human oversight, and Google says it exhibits improved efficiency on coding duties together with debugging, challenge decision, and production-ready code era. To win over builders, Google priced Gemini 3.7 Flash at 75 cents per million enter tokens and $3.75 per million output tokens via the tip of the 12 months, half the unique value of Gemini 3.6 Flash. It is usually rolling out instantly to Gemini Spark, Google’s subscription AI agent service out there in additional than 160 international locations.
That pricing sits alongside a cloud enterprise changing AI funding into income. Google Cloud’s backlog has climbed to $514 billion, and Alphabet expects to acknowledge slightly greater than half of it as income over the subsequent 24 months. Alphabet additionally holds greater than $240 billion in money and marketable securities, giving it room to maintain funding its buildout as free money circulate comes beneath stress.
Bear Case: The Invoice Comes Due
Alphabet’s capital expenditures are actually guided to $195 billion to $205 billion for 2026, up from $91 billion in 2025 and $53 billion in 2024. Second-quarter capex alone was $45 billion, double the year-earlier determine, pushing Alphabet to a quarterly free money circulate lack of $5.9 billion. Buybacks have gone to zero, and Alphabet raised roughly $56 billion in debt plus about $50 billion from inventory gross sales within the first half to assist cowl the hole.
That borrowing culminated in a $25 billion, ten-tranche bond sale that closed Monday, starting from notes due in 2028 to a $2.5 billion tranche not due till 2066. A lot of that cash funds servers and networking gear that Alphabet itself depreciates over about six years, that means a big share of this 12 months’s spending will must be repaid yet again lengthy earlier than the longest bonds come due.
