How to update gradle in android studio?

Step 1 (Use default gradle wrapper)

File→Settings→Build, Execution, Deployment→Build Tools→Gradle→Use default Gradle wrapper (recommended)

Changing to Gradle Wrapper in the new version of Android Studio:

Step 2 (Select desired gradle version)

File→Project Structure→Project

The following table shows compatibility between Android plugin for Gradle and Gradle:

Latest stable versions you can use with Android Studio 4.1.2 (March 2021):

Android Gradle Plugin version: 4.1.2
Gradle version: 6.5

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Official links

• Version Compatibility
• Migrate to Android Plugin for Gradle 3.0.0
• Find out the latest version of Gradle
• Info about the Gradle Wrapper

This may not be the exact answer for the OP, but is the answer to the Title of the question: How to Update Gradle in Android Studio (AS):

• Get latest version supported by AS: http://www.gradle.org/downloads (Currently 1.9, 1.10 is NOT supported by AS yet)
• Install: Unzip to anywhere like near where AS is installed: C:\Users[username]\gradle-1.9\
• Open AS: File->Settings->Gradle->Service directory path: (Change to folder you set above) ->Click ok. Status on bottom should indicate it's busy & error should be fixed. Might have to restart AS