What's up: Three questions for Ace Hardware’s CIO; AI supercharges earnings at Meta, Microsoft; the AI company capitalizing on our obsession with Excel; autonomous trucking through the night

Good morning. The AI investment thesis that has led to massive capital spending is looking pretty solid right now.

This is not to say that there’s no limit to valuations tied to AI, or that bubbles in specific companies or markets don’t exist and that they won’t be popped. That’s always a risk, and that risk performs a necessary market function.

But for the enterprise, the risk of under-investing and falling behind the tech curve is indeed the greater danger. And for companies, the question is no longer whether they have an AI strategy. It’s how do they rethink their business and operating model around a sound and realistic understanding of AI in their markets. More on that below from Ace Hardware's CIO, Rick Williams. He tells the WSJ Leadership Institute that he is investing in AI with a long-term horizon. The nature of such commitments by large companies is doubtless helping Microsoft, Google and other tech companies justify their massive capital spending. At times, companies can have more patience, and a greater appetite for risk, than the average investor.

AI is surprising on the upside. On Wednesday, Microsoft’s strong financial results confirmed the case for its massive capital investments in AI, which has made some critics uneasy at times. Meta’s strong results, also announced on Wednesday, suggest that the capital it is investing in AI and its super expensive recruitment efforts aren't misdirected, either.

Google so far has confounded skeptics who said AI would be the end of search. And design software startup Figma, which has built AI into a platform used by developers and designers, has priced its IPO at $33 per share amid very strong demand for its AI-powered platform. It plans to list on the NYSE today. There are no final victories in technology or business, but the demand for AI is there, as companies become more convinced that they can use it to leverage growth.

WSJLI: We hear from a lot of tech leaders that they’re deploying generative AI tools, but that employees aren’t always using them. What’s your strategy when it comes to encouraging adoption?

Williams: I think it’s acknowledging that these tools have their imperfections, and require some training. We’re not setting expectations that ‘hey there’s this new genAI tool, we expect productivity wins on day one.’

We're pretty pragmatic about it. There are a lot of industry experts out there who will tout 10x productivity. That may be the case someday. But any improvements in productivity--it could be 10%, it doesn't have to be 10x--make it worth pursuing further.

So how are we encouraging it? It’s really transitioned to the point where it’s mandatory. The expectation is that you do become familiar with it because sometime in the future it will benefit you. And recognizing that change management is a thing. People have to understand why we’re doing what we’re doing: it’s really to make them more efficient, effective, and productive.

WSJLI: Why do you find that setting those expectations is so important?

Williams: The strongest approach to encouraging and growing adoption is to recognize that it’s going to be frustrating and you’ve got to get used to the tool, but in short order.

I talked to a developer just last week about it. I was asking him to try to get an understanding of the degree to which he’s experimenting with and leveraging the tools.

He had said at first the tools – and we’re not surprised by this – ended up reducing efficiency. It took more time to do things. But within a two month period, he went to a vast improvement in his productivity. 

WSJLI: That one developer seems to have stuck with it. But what about those who don’t?

Williams:  Peer-to-peer sharing of what these tools can do, what AI can do for the organization, is better received and more effective at spreading adoption and use than a topdown approach.

We’ll leverage the wins, like I just gave you. The developer testifying to his peers on what the tool did for him is really the strongest approach to encouraging and growing adoption.

We believe that those who learn, within IT anyways, if you’re getting into this field, you should have some technical curiosity. Those who are technically curious are going to excel.

Microsoft reported revenue of $76.4 billion for its fourth fiscal quarter, topping Wall Street expectations. Its Azure cloud business grew by 39%, also exceeding expectations. Microsoft’s total capital expenditures for the quarter were $24.2 billion, up 27% year-over-year.

Meta CEO Mark Zuckerberg on the company’s earnings call described the company's AI efforts as a “massive investment” that will take years to come to fruition. Meta posted 22% revenue growth in the second quarter. 

Qualcomm logged higher profit in its latest quarter as chip sales continued to rise, WSJ reports. The software chip maker on Wednesday posted a profit of $2.67 billion for the fiscal third quarter, compared with $2.13 billion, a year earlier.

British semiconductor company Arm Holdings posted lower first-quarter earnings on an increase in engineering spending.

Samsung Electronics said it expects earnings to regain momentum on AI-fueled demand for technology products later this year, after reporting weaker quarterly earnings on its sluggish chip business.

Coming up....Apple and Amazon report earnings results today after markets close. 

The AI company capitalizing on our obsession with Excel. Tech upstarts for decades have been looking to unseat Microsoft Excel, arguably the most important piece of business software ever invented.

Meet the latest challenger. Startup Fundamental Research Labs this week released Shortcut, which embed agentic AI capabilities into a software tool that has Excel’s exact same look, feel and interface.

Social media reaction to the release was intense. “This feels like a ChatGPT moment for financial modeling,” a financial meme and influencer account known as High Yield Harry wrote on X about Shortcut.

To be sure, Microsoft has also been working to equip its own product with more AI, notes the WSJ Leadership Institute's Isabelle Bousquette. In September 2024, it announced the general availability of its AI Copilot tool in Excel. The company Wednesday reported revenue of $76.4 billion for its fourth fiscal quarter, topping Wall Street expectations.

Autonomous trucker Aurora Innovation announced Wednesday new technology that will enable its fleet to operate at night.  Aurora is now testing the system between Phoenix and Fort Worth. The startup's trucks currently haul food and dairy between Dallas and Houston, WSJ reports. A human still sits behind the wheel, just in case.

Amazon is paying the New York Times $20 to $25 million a year in a deal that lets it use Times’s content to train its AI models and feature summaries and short excerpts in its products and services, including Alexa. The WSJ reports that the annual figure amounts to nearly 1% of the Times’s total 2024 revenue.

The Cyberspace Administration of China wants Nvidia to explain the “backdoor security risks” associated with its H20 chips sold in China and submit relevant documents, it said Thursday.

Apple is closing one of its stores in China–a first. The New York Times links the store’s closure both to its location in a struggling mall in northeastern China and also slowing spending on Apple products nationwide. 

Also in a possible first, there are plans for a new U.S. data center that could consume more electricity than all the homes in its home state. The state in question is Wyoming (pop. just south of 600,000), but the joint effort between energy infrastructure company Tallgrass and AI data center developer Crusoe is pretty massive nonetheless, eventually scalable to 10 gigawatts, the Associated Press reports.

President Trump’s trade agenda is entering a pivotal two-day stretch, with the administration moving to increase tariffs on imports from several nations while a federal appeals court considers the legality of his efforts. (WSJ)

The U.S. global trade war is threatening to close the door on an era of free trade that had opened new opportunities for the developing world. (WSJ)

JPMorgan Chase Chief Executive Jamie Dimon visited the White House twice in the past two months, a sign of detente after years of tension between the head of America’s biggest bank and President Trump. (WSJ)

New York City’s deadliest shooting in the past 25 years has put public safety front and center in the mayoral race and highlighted a potential vulnerability for front-runner Zohran Mamdani. (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.