The Morning Download: Jane Street Seizes the AI Spotlight

Good morning. The explosive growth of private trading firm Jane Street provides a clear and early look at how one AI-powered firm with an innovative operating model and culture can quickly challenge the giant incumbents of its industry.

The Wall Street Journal’s Gregory Zuckerman explains how AI is integral to Jane Street's current success and its ambitions for the future. One key takeaway:

In the first quarter of this year, Jane Street made a record profit of $10.3 billion from $16.1 billion in trading revenue, according to people familiar with the matter. By comparison, Morgan Stanley and Goldman Sachs each earned about $5.6 billion. Those two firms have a combined 128,000 employees, far outnumbering Jane Street’s staff.

While many high-frequency trading firms rely on speed to create advantage, Jane Street specializes in evaluating the price of an ETF or other investment, in almost any kind of market, and comparing it with the price of its constituents or related derivatives, taking advantage when a gap emerges, Zuckerman writes. In its effort to become a major AI investor and supercharge its trading with the technology, it needs to catch the attention of AI startups and talent, he says.

This spring Jane Street said it would invest $1 billion in AI computing company CoreWeave and spend $6 billion on its AI cloud platform. Its portfolio of private companies includes a stake in Anthropic, acquired from the estate of FTX. The bankrupt crypto exchange’s founder Sam Bankman-Fried, worked at Jane Street from 2014 to 2017.

While Jane Street is known for rigorously selecting high-performing talent, the organization has been shaped by machine learning and AI. It generates its enormous profit with just 3,500 people, although it wants to add more than 500 this year, according to the WSJ. It’s an “unusually flat” organization, with no one leader to serve as its public face.

And it moves with a confidence that allows it to move against the crowd.

Even as financial firms pulled back after the 2008 financial crisis, Jane Street expanded its appetite for risk by entering new markets and making bigger trades, emerging as one of the most profitable businesses in the world. And as individual investors became a force, Jane Street rushed into that market, taking the other side of their trades.

While commodity or mid-level models may be sufficient for a range of applications, the outsized growth that Jane Street represents are a function of the highest-levels of human talent working at the cutting-edge of technology.

• Bain is vibe coding versions of acquisition targets' software to help gauge how easily the technology could be reproduced and how it might evolve, as falling software-development costs and AI disruption reshape dealmaking, FT reports. 

• Microsoft CEO Satya Nadella, in an interview with the Wall Street Journal, criticized how a small group of companies has captured the value of AI, predicting the public wouldn't tolerate just a few models and firms "doing all of the learning for the world." Microsoft, seeking to differentiate itself, has recently rolled out low-cost models and Copilot Cowork, an agent that lets users pick cheaper options. It is also weighing whether to host China's ultra-low-cost DeepSeek.

• In recent days, Google has seen two high-profile researchers announce moves to AI rivals, the Information reports, with Google DeepMind's John Jumper, the 2024 Nobel Prize in Chemistry, leaving for Anthropic and researcher Moam Shazeer announcing a move to OpenAI. 

• Amazon MGM Studios has dropped a movie on OpenAI's Sam Altman. The move comes after Amazon earlier this year said it would invest $50 billion in the AI company. 'Artificial,' which covers Altman's 2023 firing from the company, will be shopped to other studios, Variety reports. 

• A group representing Amazon employees filed a complaint with Seattle's Office for Civil Rights alleging that Amazon illegally retaliated against three workers who testified to the city council in favor of regulating data centers, investigating them and threatening possible discipline, the New York Times reports. Amazon says employees can't present themselves as company representatives  without approval.

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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.