The Morning Download: Moving AI from the Periphery

Good morning. Many enterprise AI use cases today live at the periphery — useful at the margins, but not near the systems and decisions that define how a business actually runs, says Matt Wood, Amazon Web Service's chief AI and technology officer.

I sat down with the AWS veteran, who rejoined the company in May after a nearly two-year stint at PwC, to discuss why that is, how long it will take to get AI from the edge to the core of business, and how companies can keep costs in check.

Edited excerpts from the conversation are below. 

WSJ Leadership Institute: Matt, you talk about how the early AI use cases we’re seeing are only at the “periphery” of businesses. What does that mean?

Wood: They can be pilots or you run them in environments which are very, very low risk, outside regulated workloads, areas which have very constrained blast radius, where you have a very, very high chance of success or where the cost of failure is very, very, very low. Think customer service, document management, all those sorts of things.

Nobody's running core banking against AI or anything like that. It’s exactly the same as you wouldn't have been able to run core banking systems on AWS 20 years ago, nor would we have recommended it.

Please note: The Morning Download won't be published Friday in observance of Juneteenth in the U.S. We'll be back Monday.

And that's not necessarily a bad thing. It takes time to build systems. It takes time to build the trust for people that use the systems.

WSJLI: Are there any core business areas that you would advise not using AI today? 

Wood: I wouldn't at this point recommend that AI is pushed into the point where you are holding AI accountable for a set of results. You still really want somebody who will sign off on an audit or a clinical trial or a contract.

Those are areas where technically you could have AI do it, but in reality, in an organization, in the real world, it doesn't survive the test of the contact with the real world.

WSJLI: How important is cost and token costs for companies trying to deploy AI?

Wood: This is kind of a little counterintuitive because a lot of people talk about the costs of the frontier, which is certainly going up as the models get more capable. But if you standardize for a particular level of intelligence, the cost of running at that level of intelligence is going down by one or two orders of magnitude per year. That hasn't really mattered up until this point because you've had to operate at the frontier to be successful. But now these models are so capable, you can come off the frontier a little bit and [reduce your] cost.

A growing number of workloads run off the frontier. And as the frontier will continue to move forwards, I think it will get progressively more expensive. But off the frontier, which is just how well it worked three months ago, there's still a remarkable amount of opportunity to apply that to your organization, and that cost keeps going down.

When Coding Meets Culture. An industrial art space on Delancey Street welcomed an eclectic crowd Wednesday for an event that quickly became known as “Vibe-Coding Coachella.”

It was vibe-coding startup Replit’s inaugural Vibecon, where baggy jeans and tie-dye were the fit du jour and orange bean bag chairs were the seating.

If it seems out of step with the events typically attended by your faithful WSJ Leadership Institute reporting team, that was on purpose, Replit co-founder and CEO Amjad Masad told me. While most tech conferences are full of developers and assorted fanboys sipping on virgin LLM-themed cocktails and sharing Codex hacks, Vibecon was trying to strike a different tone: targeting an audience of non-technical New York creatives to sell them on the merits of AI.

From a business perspective, the move was tactical, Masad said. An increasingly crowded market of vibe-coding vendors are now competing for the same set of eager, AI-loving early adopters, he said. “But as an industry,” he added, “we haven't done  a good job of outreach, of getting to people that otherwise wouldn't take the initiative themselves.”

Doing so will be necessary if Replit is going to accomplish its ultimate goal of one billion users. (Currently it has 60 million).

Instead of an expo hall, Vibecon showcased a series of different art installations, each running on some type of AI. At one station, an AI model created a light show based on the movements of preprogrammed robotic arms. At another, an AI model used a live picture of your face to direct a pen in your hand to create a contour self portrait. Then there was the AI model that interviewed you about a salient memory and created a real signature perfume based on it.

What was Masad looking to get out of the event? To convince at least one AI skeptic that the technology is worthwhile and enriching. And perhaps have someone leave feeling like it was truly life changing. “Though I don’t know if they’ll go that far,” he added. 

Well this reporter can’t definitively say her life was changed, but she did go home smelling like a brand new bergamot, rose and sandalwood signature scent. All in all, not bad for an evening with Lower East Side art bros.

• Apple CEO Tim Cook tells the Journal that the company plans to raise prices on its products to offset the surging costs of memory and storage chips. “Unfortunately, price increases are unavoidable,” he said. Cook declined to offer details on the timing or scale of the planned price increases, nor which products will be affected. 

• $1,299 (or higher). That's an educated guess from the WSJ's Nicole Nguyen and Rolfe Winkler on how much the base model of the anticipated but as yet unannounced iPhone 18 Pro could cost given the memory-chip crunch.

• Wall Street banks deploying AI now face a hiring dilemma: the technology is making existing workers much more efficient, but executives are reluctant to slash jobs and upend an apprenticeship model in which junior bankers perform rote tasks

• Baseten, which specializes in providing software and computing capacity to companies tapping in to lower-cost AI models, is finalizing a $1.5 billion fundraising round. It will be a dual-tiered structure, with some investors putting in money at an $11 billion valuation and others at a $13 billion valuation, according to Baseten.

• Speaking to reporters at a Group of Seven summit, French President Emmanuel Macron said the Trump administration's ban on Anthropic reflects growing awareness that AI can be dangerous. “The bad thing is that the reaction is, in a way, strictly nationalist,” he said, adding that democracies need to cooperate on these issues, the WSJ reports. “We won’t buy any models made by these companies if overnight, you can just flip the switch,” Macron said.

• Dutch supplier of chip-making equipment, BE Semiconductor Industries, also known as Besi, raised its long-term revenue and profitability targets, citing increased demand for artificial intelligence-related products.

This September 14–15, technology leaders will gather in New York City for the WSJ Technology Council Summit to explore how enterprise AI is moving from experimentation to measurable business value. Join the Technology Council and be part of the conversations shaping the future of leadership, as executives tackle AI deployment, cybersecurity, evolving technology policy, enterprise transformation and the strategies driving the next generation of business innovation.

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Follow Isabelle Bousquette on LinkedIn, Instagram, X, and TikTok for more behind the scenes on her tech and AI coverage, and lately, her contributions to the WSJ Leadership Institute's new Executive Resilience series, where she's profiling America's top execs about their fitness and wellness habits.

Follow Belle Lin on LinkedIn and X for her latest reporting on enterprise technology and AI.

Steven Rosenbush is chief of the enterprise technology bureau at the WSJ Leadership Institute. He also has a column. You can follow him on LinkedIn.

Tom Loftus is the editor of The Morning Download. He suggests following Isabelle, Belle and Steve on their various social channels. But if you insist, here's his LinkedIn.