Google Unveils New AI Model Amidst Capital Expenditure Increase and Negative Free Cash Flow

On August 13, Alphabet's Google introduced Gemini 3.7 Flash, a new AI model designed for coding and automated business tasks. This launch comes amidst uncertainty over when the company's flagship Gemini 3.5 Pro model will be released. The rapid pace of releases suggests that Google is quickly iterating on its AI models aimed at powering autonomous AI agents. The new model targets businesses building systems capable of planning tasks, using software tools, and completing multi-step workflows with less human oversight. Google claims improved performance on coding tasks such as debugging, issue resolution, and production-ready code generation. To attract developers, Google has lowered the pricing for Gemini 3.7 Flash to 75 cents per million input tokens and $3.75 per million output tokens through the end of the year, a significant reduction from the original cost of Gemini 3.6 Flash. The new model is immediately available on Gemini Spark, Google's subscription AI agent service in over 160 countries. This pricing strategy coincides with Google Cloud's growing backlog of $514 billion, with Alphabet expecting to recognize about half of it as revenue over the next 24 months.