Key Points

Following its May introduction, Alphabet's Gemini 3.5 Pro launch has reportedly been postponed.
Yet Gemini has doubled its user base over the past year and now serves 900 million monthly users.
Alphabet's AI revenue is speeding up, the firm is funding new AI processors, and its stock remains attractively valued.

Lately, some shareholders have begun selling Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) shares after reports indicated a delay in the Gemini 3.5 Pro model, first previewed in May.

Alphabet shares have only slightly outperformed the S&P 500 year to date, and this quick reaction by certain investors shows a lack of awareness about the rapid progress the company has achieved recently.

Specifically, the 900 million monthly Gemini users the company now serves.

Image source: The Motley Fool.

Gemini users more than doubled to 900 million in less than one year

Investors understandably feel let down that newer Gemini models remain unreleased, particularly since Google Gemini trails competitors like Claude and ChatGPT in key areas such as coding.

The company is still evaluating Gemini 3.5 Pro and views it as not yet ready for broad release. Both users and investors expect regular updates of improved AI models and dislike postponements.

However, Alphabet has more than doubled its Gemini users within a single year, hitting 900 million monthly active users by May, while advancing significantly to differentiate from rivals.

These strong user increases stem from Alphabet's widespread software and services. Billions rely on Search, AI Mode searches, YouTube, the Android operating system, and Google Workspace, each incorporating Gemini features.

OpenAI and Anthropic lack comparable distribution across multiple platforms, which aided Alphabet in converting service users into Gemini users. This reach may provide lasting benefits as Alphabet bundles Gemini into broader software subscriptions.

Evidence already shows Alphabet converting AI users into paying customers, with $1.2 billion in Gemini revenue generated last year.

Additionally, Apple is adopting Gemini as the foundation for its updated Siri AI, turning a major rival into a key customer. Reports indicate Apple will pay Alphabet $1 billion each year for Gemini access.

Alphabet's got a new AI chip up its sleeve

Beyond the notable Gemini user expansion and AI sales growth, details emerged about a new Alphabet processor that could boost AI efficiency several times over.

Reports from The Information indicate Alphabet is developing a chip named Frozen v2 that embeds elements of its Gemini design directly on the processor, delivering six to 10 times more AI tokens per unit of power than current TPU processors. This Frozen chip could greatly enhance Gemini efficiency.

Launch is not expected until 2028, yet it highlights Alphabet's commitment to advancing in AI hardware.

Knee-jerk reactions aren't the way to play the AI boom

Alphabet has achieved substantial Gemini user growth, quickly increased AI revenue, and keeps investing in new AI hardware to stay ahead of competitors.

Given this progress, investors should not abandon Alphabet hastily. AI software and services will continue evolving, and even large tech firms like Alphabet require time to adjust to market shifts.

Alphabet stock also appears reasonably priced, with a trailing price-to-earnings ratio of just 26 compared to the tech sector average of 40, indicating a potential buying opportunity as the company strengthens its AI standing.