Good morning. AI may not lead to massive job losses, but it's still changing what it means to be a company. The great challenge facing leaders of all organizations is to understand what those AI-driven changes entail for their markets and operating environments.

Jack Dorsey, the CEO of Block, made that assessment in a letter to shareholders Thursday explaining why the parent of Square and Cash App will cut 40% of its workforce, or more than 4,000 jobs. Dorsey, who co-founded Twitter as well as Block, cited rapid advances in AI tools reshaping how companies operate. “The core thesis is simple,” wrote Dorsey in his note. “Intelligence tools have changed what it means to build and run a company.”

Block isn’t alone. Salesforce cut about 4,000 customer-support roles last year citing AI gains. Pinterest is shedding nearly 15% of staff to refocus on AI initiatives.

Such job cuts are only one aspect of what it means for a company to adapt to AI. The question isn’t simply a matter of cutting costs or doing more with less, although there will be more instances where that happens. The big questions are how AI changes the way leaders understand their customers, their products and services and the way their organizations are structured.

Even if AI doesn’t lead to mass layoffs, it may lead to the loss of jobs in the C-suite. That’s the case at Amazon.com, where insider Peter DeSantis took over late last year as head of AI. Today, the Journal takes a look at where he taking the company:

In December, Amazon said its chief AI scientist, Rohit Prasad, would leave the company and his responsibilities would be handed over to DeSantis, a widely respected nearly 28-year veteran who spearheaded cloud computing and silicon chip-making operations, among other accomplishments.

His strategy “is less about shipping new bleeding-edge AI models every few months, as OpenAI and Anthropic have been doing, than about giving customers more cost-effective ways to meet their AI needs while keeping their technology up-to-date,” the Journal says.

That direction is rooted in customers and the business, and figuring out how technology helps the company move along its particular path. As consultant Tim Crawford told the Journal: “Some CIOs are asking “ ‘what’s the outcome and what’s the price I’m paying for that?’ Because it’s more about value.”

Even successful tech companies of relatively recent vintage find it necessary to remake their leadership and operating models in the face of AI. The task for companies outside the core of the tech sector is certainly just as urgent.

Latest data questions AI job apocalypse theory fears. Greg Ip argues in today's Journal that the data so far doesn't yet support the doomsday scenario: "It requires a breakdown in how the market economy functions," he writes. "Nothing like it has happened in the U.S. before, and there is no evidence it is happening now."

Historically, technology destroys some jobs while creating others and boosting productivity. AI shows little sign of breaking that pattern.

Consider, he writes:

• Software developer employment is up 5% year-over-year, a pace largely consistent with the past 23 years.
• In 2024, the median young computer science graduate earned 63% more than the typical young graduate, up from 47% in 2009,
• Business spending on software leapt 11% in the fourth quarter of last year from a year earlier, the fastest in nearly three years.

Panic over software-business disruption from AI appears to have subsided. A weeks-long selloff in software stocks eased after Anthropic's Tuesday presentation showcasing its Claude tool integrating with Salesforce, Google, DocuSign and others — signaling that established software companies will play a role in the AI era rather than be swept aside by it.

This week, Salesforce, Workday, Snowflake and Intuit all reported earnings and used the moment to tout their AI strategies and partnerships, the WSJ reports. Results were mixed.

Intuit gives soft third-quarter outlook. Intuit logged higher profit and sales in its latest quarter as its QuickBooks platform continues to attract demand. But shares fell 3% after hours as third quarter guidance missed Wall Street estimates.

Intuit shares have struggled amid broader industry fears that AI could displace critical software functions. CEO Sasan Goodarzi pushed back, telling Barron's that Intuit is insulated from the risk of being replaced by AI. Intuit, which also offers its own AI capabilities, announced on Tuesday that it has partnered with Anthropic to bring custom AI agents to mid-market businesses on the Intuit platform. Intuit also previously announced a partnership with OpenAI.

Amazon's low-cost approach to winning the AI race. Amazon's new AI chief Peter DeSantis is betting the company can close its gap with rivals by making AI cheaper rather than flashier. "AI has a cost problem," he tells the Journal, arguing Amazon's in-house Trainium and Inferentia chips can train and run models at roughly half the cost of competitors.

Give the CIOs what they want. Tech consultant and longtime chief information officer Tim Crawford tells the Journal that enterprises are increasingly drawn to more specialized models like Amazon's Nova AI models because they are cheaper, faster and can be tailored to specific workloads.

Amazon was caught flat-footed by ChatGPT in 2022 despite an early lead with Alexa, and its Nova models have lagged rivals on benchmarks. DeSantis, a 28-year Amazon veteran, replaced former AI chief Rohit Prasad in December. 

Anthropic says, 'no.' Anthropic won't back down in its dispute with the Defense Department over AI guardrails ahead of a Friday deadline. CEO Dario Amodei reiterated the company's position Thursday: "We cannot in good conscience accede to their request." 

At a Tuesday Pentagon meeting, Defense Secretary Pete Hegseth gave Amodei until 5:01 p.m. Friday to agree to the military's right to use the technology in all lawful cases, threatening to invoke the Defense Production Act or designate Anthropic a supply-chain risk if it refuses. Anthropic bars users from deploying its Claude models for mass domestic surveillance or autonomous weapons.

Emil Michael, undersecretary of war for research and engineering, pushed back on X, arguing mass surveillance is already illegal under the Fourth Amendment and that the department "won't have any big tech company decide Americans' civil liberties." 

Dell's AI surge accelerates. Dell Technologies reported a 39% revenue jump to $33.38 billion, driven by AI server demand, with $34.1 billion in fourth-quarter AI orders and a $43 billion backlog. The company forecast fiscal-year revenue of up to $142 billion, above estimates.

OpenAI's post-shooting safety pledge. OpenAI pledged stronger safety protocols to Canadian officials after a fatal British Columbia school shooting involving a suspect who used ChatGPT. The Journal reported earlier that the company had considered alerting law enforcement over the suspect’s interactions. Ultimately OpenAI shut down the account without notifying police.

EBay cuts 800 jobs. EBay will lay off about 6.5% of its global workforce, or roughly 800 employees, as part of an effort to cut costs and restructure the business, the WSJ reports. EBay employed about 12,300 people as of the end of last year. The WSJ Leadership Institute’s Belle Lin last year reported on eBay’s AI-powered quest to shed its online auction house reputation.

Paramount Skydance emerged victorious in the bidding war for Warner Bros. Discovery after Netflix said it wouldn’t match the David Ellison-led company’s latest offer for the iconic Hollywood property. (WSJ)

The Federal Reserve is waging a behind-closed-doors legal challenge to a pair of subpoenas issued as part of U.S. Attorney Jeanine Pirro’s criminal investigation into Chair Jerome Powell, according to people familiar with the matter. (WSJ)

Pollution from U.S. power plants rose last year, a rare uptick in an otherwise long-term downward trend, partly because of more coal being burned to generate electricity. (WSJ)

The WSJ CIO Journal Team is Steven Rosenbush, Isabelle Bousquette and Belle Lin.

The editor, Tom Loftus, can be reached at thomas.loftus@wsj.com.