What's up: AI cloud company Lambda raises over $1.5 billion; an AI-powered disconnect between a solid economy and an anxious public

Good morning. OpenAI and Intuit agreed to a multiyear partnership in which the financial technology company will deepen its use of OpenAI models and make applications available on the artificial intelligence company’s ChatGPT.

The companies said they expect the deal to generate $100 million in revenue for OpenAI over an unspecified number of years. You can read the full details in my story here. I spoke to Intuit CEO Sasan Goodarzi and OpenAI CEO of Applications Fidji Simo yesterday about the rationale for the deal, and the broader outlook for AI adoption.

Some highlights:

• The end-to-end agreement will engage Intuit employees and customers. It will expose Intuit products TurboxTax, QuickBooks, Credit Karma and Mailchimp to a broader range of potential users on ChatGPT. Goodarzi said the biggest opportunity for Intuit is reaching untapped customers who are engaged with ChatGPT.
• Intuit will gain extensive access to OpenAI’s APIs. The companies said the partnership will allow Intuit to leverage OpenAI frontier models for cutting-edge use cases across the business. The contract also includes Intuit’s continued use of ChatGPT Enterprise across the company. It helps Intuit employees incorporate AI into daily workflows and further improve productivity, the companies said.
• Intuit currently uses OpenAI’s large language models, and will continue to use other commercial third-party LLMs and open-source LLMs, as well as their own proprietary custom-trained financial models developed for product or domain-specific use.
• The combination of ChatGPT’s accessibility and Intuit’s expertise is “a way to unlock financial literacy…at a scale that hasn’t been tried before,” said Simo. OpenAI announced in May that she was joining the company. Her prior roles included CEO of Instacart and head of the Facebook app.
• The idea is to make ChatGPT useful in every part of life, without simply backing a series of applications in one super app. Rather, the idea is to create a personal super assistant, according to Simo. “We are turning ChatGPT from a tool that was very useful, but fairly insular and not connected to the rest of the ecosystem, into a tool that is connected to incredibly helpful services,” she said.

News Corp., owner of The Wall Street Journal, has a content-licensing partnership with OpenAI.

The deal comes at a time when anxiety over AI is felt at multiple levels, from stock valuations and debt levels to the ability of AI and data center companies to generate enough revenue to justify it all. While the overall impact of AI isn’t overstated, expectations about the pace of adoption are, according to Goodarzi.

Over time, Goodarzi said AI will “spark more global innovation than the world experienced with the advent of electricity or the internet. I think that’s not overblown.” However, he cautioned that the pace at which consumers and businesses fully integrate AI into every part of their lives is “a bit overblown,” because difficult tasks such as those involving money and finance require high trust and accuracy.

The WSJ Leadership Institute's Belle Lin has the scoop on the latest AI infrastructure deal. See below. 

Lambda, a San Jose, Calif.-based startup that rents out access to advanced AI chips, said Tuesday that it raised over $1.5 billion in its latest funding round.

The Series E round was led by TWG Global, a holding company led by Mark Walter and Thomas Tull and with participation from Tull’s US Innovative Technology Fund and other investors. 

Enter the neo-cloud companies. The funding comes amid an ongoing AI infrastructure buildout and with it the rise of firms like Lambda, which act as middlemen by paying for the development of data center clusters, buying the chips, and then renting them out at a premium.

“AI compute is becoming the backbone of every major innovation and right now, specialized providers like Lambda have a chance to own that infrastructure before the market consolidates under the big cloud players," TWG's Tull tells Belle.

Lambda’s CEO Stephen Balaban says that the infusion of new capital will help go toward buying additional Nvidia GPUs, as well as building its own data centers.

Not everyone is so sanguine about the outlook for AI investment. Investors in recent days have dumped assets in the lead-up to key tests for whether the artificial-intelligence boom will continue into the new year.

Monday saw the Dow Jones Industrial Average experience the worst three-day stretch since President Trump’s tariff turmoil in April.

The WSJ says that Monday’s retreat, which hit everyone from Nvidia, Meta and Amazon to Dell Technologies, Oracle and CoreWeave, provides fresh evidence that Wall Street is peeking closer under the hood of the expensive and sometimes circular deals underpinning the AI infrastructure build-outs.

Of course, the tune could all change on Wednesday when Nvidia reports earnings.

It's not just equity: Big tech borrowing boom goes on.

Amazon kicked off its own U.S. dollar bond offering, raising $15 billion, Bloomberg reports. The sale, Amazon’s first in three years, comes on the heels of similar efforts by Alphabet, Meta and Oracle, all motivated in part to finance their investments in AI.

WSJ Columnist Greg Ip looks at the disconnect between investors  and "gimlet-eyed executives" on one side and the many Americans anxious about what the AI boom could mean for their livelihood and... for humanity. 

Just look at this chart.

This isn’t like the dot-com era, says Ip. A survey in 1995 found 72% of respondents comfortable with new technology such as computers and the internet. Just 24% were not. Now those proportions have flipped: just 31% are comfortable with AI while 68% are uncomfortable, a summer survey for CNBC found.

AI can be unsettling even if you face no direct threat from it, just as an out-of-control border bothered people unaffected by illegal immigration. Both undermine your sense of control. “The AI fear is one hunk of meat in a stew of distrust and grievance that has been marinating for a long time,” said Micah Roberts, a partner at pollster Public Opinion Strategies, which conducted the CNBC survey.

That might be why Americans are becoming more open to regulating AI.

A poll of roughly 2,000 people by Narrative Strategies, a communications and public relations firm, found that 57% said tech and AI needed more, well above other industries.

The empire is striking back.

Leading the Future, an AI industry backed super PAC, named its first target: New York State Assemblymember Alex Bores, who co-sponsored a bill requiring the biggest AI companies to publish safety protocols for serious misuse of their tech.

Bores told CNBC that he has a master's in computer science and has spent almost a decade working in tech. "If they are scared of people who understand their business regulating their business, they are telling on themselves,” he said. 

Cloudflare, which provides cloud-based networking and cybersecurity services, said Tuesday it was experiencing issues with its network, the New York Times reports. 

Alphabet’s DeepMind unit unveiled a new weather prediction model it says is faster and more accurate than previous models, Bloomberg reports. Researchers at the London-based AI unit said WeatherNext 2 provides hourly forecasts, more accurate two-week forecasts and can better predict the tracks of tropical storms, including hurricanes.

Baidu reported its worst-ever revenue decline as advertising demand remained weak, undermining the Chinese search-engine giant’s investment efforts in growth areas like AI, WSJ reports.

The emerging recovery in the U.S. office market is strikingly uneven. A handful of business districts, from New York’s Park Avenue to South of Market in San Francisco, are leading a turnaround. But most office markets are still burdened with empty space and anemic rents. (WSJ)

President Trump said Monday that the U.S. would sell advanced F-35 jet fighters to Saudi Arabia, announcing his decision the day before he meets at the White House with Crown Prince Mohammed bin Salman. (WSJ)

Former Harvard University President Larry Summers said he would be stepping back from public commitments after receiving criticism over his correspondence with sex offender Jeffrey Epstein. (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.