What's up: Meta’s elite AI unit is sparking tension with the old guard; PsiQuantum raises $1 billion and it's sticking with its 2027 timeline for delivering a full-scale commercial-grade quantum computer; Microsoft is cracking down on work speech and limiting remote work.

Good morning. Oracle’s blowout financial forecast, which drove shares to a 31% premarket gain, reflects its understanding of what comes next in the evolution of AI and business. As companies run ever-larger workloads on the AI infrastructure that Oracle and others are building now, usage will spike way beyond current levels.

That process, known as AI inference, will be more energy- and compute-intensive than the process of training AI models, Oracle co-founder and Chief Technology Officer Larry Ellison said on yesterday’s fiscal first-quarter earnings call. The WSJ Leadership Institute’s Belle Lin has the story here.

The unfolding age of inference will have fundamental implications for companies at every level, from the business and operating model, to leadership, governance and the way they think about recruitment and the reimaging of roles. They are going to have to eliminate or rethink much of their process and many if not all of their roles, especially when it comes to getting people and AI to work together in an effective way. And data, already so important, will become ever more critical to competitive advantage.

The multitrillion-dollar global AI infrastructure projects under way around the globe can seem extravagant from today’s perspective—but they will make sense in the next few years if demand for AI inference grows as fast as Ellson says it will. That demand on AI infrastructure is closely tied to the development of AI agents, which are expected to run for longer and longer periods of time as they work in the background on increasingly complex problems and tasks.

“Millions of customers are using those AI models to run businesses and governments,” Ellison said. AI inference will be used to run robotic factories, robotic cars, robotic greenhouses and biomolecular simulations for drug designs. See below for more of  Ellison’s earnings-call discussion.

Company leaders are already working through the business problems that flow from all of this change. We’re thinking about it, too. Watch this space next week for our coverage of the WSLI’s Tech Council Summit in New York. Meanwhile, use the links at the end of this email to let us know how your company is adapting to AI.

AI inferencing will run the business. "AI inferencing will be used to run robotic factories, robotic cars, robotic greenhouses, biomolecular simulations for drug design, interpreting medical diagnostic images and laboratory results, automating laboratories, placing bets in financial markets, automating legal processes, automating financial processes, automating sales processes."

AI inferencing is key to the next stage of artificial intelligence: Agents. "AI is going to write—that is, generate—the computer programs called AI agents. That will automate your sales and marketing processes. Let me repeat that. AI is going to automatically write the computer programs that will then automate your sales processes and your legal processes and everything else and in your factories and so on...it's AI inferencing that will change everything."

Some of Mark Zuckerberg’s expensive new recruits have already defected to other AI labs, WSJ reports. Existing employees have jockeyed for new spots within Meta’s restructured AI organization or lobbied for raises in light of the influx of highly paid new colleagues. 

DeepSeek may have a new challenger and it’s not from the U.S. or China, but from the United Arab Emirates, CNBC reports. K2Think is a low-cost reasoning model built on top of Alibaba’s open source Qwen 2.5. 

Microsoft plans on integrating a new AI model into its Office 365 apps and it’s not from OpenAI, but rival Anthropic, the Information reports. 

Nvidia, lobbying to maintain commercial ties to China, is labeling those Washington politicians opposed to any such deal as susceptible to AI doomerism. Congress members, unschooled in Silicon Valley turf wars, are puzzled by the monicker, the New York Times reports. 

Long after companies including Amazon.com and AT&T gave employees marching orders to return to the office five days a week, Microsoft on Tuesday began calling employees “home,” but with a distinctly 2022 vibe. Employees will only need to report to the office three days a week, Bloomberg reports. The company also made changes to its internal communication channels and building security measures following a protest by employees to pressure the tech giant to stop doing business with Israel.

Apple released its iPhone 17 series, including a thinner “iPhone Air” which the WSJ describes as a precursor to new form factors like a foldable iPhone, expected to appear as soon as next year.

Is thinner better? "The barely there Air is beautiful," says WSJ Tech Columnist Nicole Nguyen, but "the beauty comes at the cost of features we care about."

The next, next form factor? For all the talk around Apple being continually lagging in the AI department, the introduction Tuesday of a new live translation feature for its AirPods Pro 3 reads—to the world travelers at WSJLI at least—as a far more interesting application of AI than, say, searching through a work calendar…if it works as advertised.

PsiQuantum, which is targeting an aggressive 2027 timeline to deliver a full-scale commercial-grade quantum computer, said Wednesday that it collected $1 billion in its latest fundraise, valuing the startup at $7 billion.

“I think this is the investment world sort of putting a flag in the ground and declaring that it’s game-on for quantum computing,” PsiQuantum co-founder and Chief Executive Jeremy O’Brien, tells WSJ Leadership Institute's Isabelle Bousquette.

The Series E financing comes amid a surge of recent activity in the space. Quantinuum’s latest fundraise earlier this month gave it a valuation of $10 billion, IQM raised $320 million at a $1 billion valuation, and Infleqtion said it would go public via a special-purpose acquisition company at a $1.8 billion valuation.

A federal judge late on Tuesday blocked President Trump from removing Lisa Cook from the Federal Reserve Board of Governors while a lawsuit challenging her firing proceeds. (WSJ)

NATO-member warplanes shot down several Russian drones over Poland, the first time the alliance has engaged Russian drones over a member’s territory in what officials say was a test of its defenses. (WSJ)

Novo Nordisk cut its guidance for the second time in six weeks and announced plans to slash around 9,000 jobs under a new restructuring effort, as its new chief executive tries to revive its fortunes in the booming weight-loss market. (WSJ)

U.S. stocks crawled to a new record on Tuesday after the latest government report on the weakening labor market raised hopes that the Federal Reserve will cut interest rates more aggressively. (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.