AHC: Austria victorious in Austro-Prussian War

Austria builds up its armed forces more?

Not even necessary. In the war proper, Austria had the advantage in artillery and cavalry (the Prussian artillery during the Franco-Prussian war was built with money gained in the Austro-Prussian War). The only thing Prussia had going for it were the breech-loader rifles that had ... flaws. Crappy range, primarily. Austiran muzzle-loaders actually had better range than Prussian needlers (also, better accuracy, the needler, IIRC, had faulty seals on the firing chamber that released hot gases while firing in the direction of the user's face, meaning most Prussian troops were firing from the hip).

What do the Austrians do? They order their infantry to go point-blank and prepare for a bayonet charge, conveniently removing two advantages for themselves and getting their infantry ripped to shreds for it.

Just have their command be a bit less retarded, keep the Prussians at a distance. If Austria wins Koniggratz (doable), Prussia's army suddenly finds itself on the wrong side of a mountain range, having to retreat across a territory they've already stripped of food and facing harassement by an enemy with superior cavalry forces. Pretty much a recipe for losing your entire force.

Granted, Prussia had substantial reserves, but it's unlikely they'd do them much good. Allow Prussia a barganing chip during the peace talks, since Prussian leadership was certain the invasion of Bohemia was an all or nothing affair.

Naturally, I'm not counting Napoleon III's potential intervention here and even if he did, it's likely Napoleon would push for a status quo ante peace ... or allow some annexations (Austria was primarily aiming for Silesia OTL, although there were other plans, including expanding Saxony). I'm partly ignoring it because, well, Napoleon III was difficult to predict, his stance on intervention went back and forth several times (including switching the side he planned on joining) and, secondly, I'm not familiar enough with French planning and politics to know precisely what course of action he'd take.
 
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