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AI bubble talk grips the market. But in the C-suite there’s more FOMO over AI’s benefits than fear of an AI bustup

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Hello and welcome to Eye on AI. In this edition…Nvidia becomes the first $5 trillion market cap company…Anthropic finds AI models have ‘introspection,’ of a kind…and Meta, Alphabet, and Microsoft tell investors just how much they’ve been spending on AI data centers. 

Hello, it’s Jeremy here. I’m just back from Fortune Global Forum in Riyadh, where AI was very much a central feature in many of the discussions. I will provide a few insights from what I learned there.

Of course, there was a lot of discussion at the event about whether there’s an “AI bubble”—and that was before we got the latest earnings and cap ex numbers from Meta, Microsoft, and Alphabet. Wall Street’s disparate reactions to the companies’ quarterly report cards show the market’s growing impatience to see tangible results from hefty AI investments. They will only support companies who can show they are seeing notable revenue impact today.

Why the market reacted so differently to Meta’s, Microsoft’s and Alphabet’s capex numbers

Consider Alphabet, which saw its shares climb after its earnings report. With its quarterly search revenues growing 14.5% year-over-year, and cloud revenues up 32%, Alphabet continues to defy concerns that AI poses an existential innovator’s dilemma to its core advertising-based business model. By contrast, Meta said capital expenses on AI data centers next year would be even larger than the already whopping $70 billion to $72 billion it’s spending this year as CEO Mark Zuckerberg races to build “super-intelligence,” an incredibly ambitious effort with limited immediate revenue impact. Investors weren’t having it, and Meta’s shares got hammered, dropping 9% in pre-market trading.

Investor reaction to Microsoft’s earnings fell somewhere between these two extremes. Like Alphabet, it reported revenue numbers that exceeded consensus analyst forecasts, but not by much, and it also said capital expenditures would climb more than analysts had anticipated. So it saw its shares slide about in line with investors’ disappointment in the size of the gap between revenue acceleration and capital expense growth, even though Microsoft’s cloud computing sales were up an impressive 40% from last year, a figure it largely attributed to AI spending.

What was striking at Fortune Global Forum, however, was how little global executives seemed to care about these financial market dynamics. If there was any consensus from the discussions in Riyadh, it was that the current moment is a lot like the early days of the internet or the roll out of cloud computing in the mid-2000s and early-2010s. In other words, a real technological transformation is underway. Yes, it might involve some companies becoming overvalued—as did happen with the internet boom. But almost all agreed that AI is going to have a transformative and lasting impact on their companies, and on the world economy, even if there is a market correction.

Executives are finding value in AI

At an IBM-sponsored dinner at FGF that Fortune-hosted, Ana Paula Assis, IBM’s senior vice president and chair for EMEA and growth markets, said that, in her experience, it wasn’t the fear of an AI bubble—the concern that AI might just a flash in the pan that doesn’t live up to the hype—that held companies back from investing in the technology. Instead, it was the speed of AI innovation that was actually the problem. Some companies, she said, seemed worried they would build systems around one set of models and capabilities, only to have those eclipsed in just a few months or a year, requiring them to change those workflows and swap models again. She described some potential customers as “like deer in the headlights” dazzled and frozen in place by the pace of change.

On stage at the conference, Ruth Porat, the president and chief investment officer at Alphabet, echoed Assis’s view to some degree. She noted that there was a big disparity between the speed of AI advances and the speed at which companies were adopting the technology. She said this disparity was largely the result of how difficult it is for large enterprises to change internal processes in general. And to get the most out of AI requires companies to rethink every process, she said, so it is perhaps not surprising that this is happening much more slowly than the rate at which AI companies, including Google, are rolling out new AI models and capabilities.

IBM put out some survey results this week for EMEA enterprises that show companies are indeed moving ahead with deploying AI at scale. Its survey of 3,500 senior executives in 10 countries found that two-thirds reported “significant productivity gains” from deploying AI. In some sectors, such as finance, the figure was 72%. Adoption in Saudi Arabia was even higher still—84%. What’s more, across EMEA, 92% of those surveyed were confident that AI agents would deliver ROI within the next two years. (Which may prove the point about the tech capabilities running far ahead of adoption. You might remember how many top tech execs declared 2025 to be “the year of AI agents.” I guess the real year of AI agents might be 2027!)

Ok, with that, here’s more AI news.

Jeremy Kahn
jeremy.kahn@fortune.com
@jeremyakahn

FORTUNE ON AI

Character.AI bans teens from talking to its chatbots amid mounting lawsuits and regulatory pressure—by Beatrice Nolan

Everyone thinks AI is replacing factory workers, but Amazon’s layoffs show it’s coming for middle management first—by Eva Roytburg

Martin Sorrell says AI has already ‘missed the Oppenheimer moment’—by Allie Garfinkle

Longevity science is on the cusp of major breakthroughs thanks to AI, but significant ‘data gaps’ need to be filled, expert says—Alexei Oreskovic

AI IN THE NEWS

Nvidia becomes world’s first $5 trillion company as it reveals $500 million order backlog. The AI chip company became the first business ever to reach a $5 trillion market capitalization, after its shares rose earlier in the week following several announcements by its CEO and founder, Jensen Huang, at a developer conference in Washington, D.C. Huang revealed that the company has a $500 billion order backlog for its latest Blackwell GPUs and its upcoming Rubin GPUs. The company has also recently announced deeper partnerships and investments with OpenAI, Oracle, and Eli Lilly. Nvidia has seen its market cap add $3 trillion in value since early 2024. Read more from The Wall Street Journal here.

Fed Chair Powell says AI boom not comparable to dot com bubble. U.S. Federal Reserve Chair Jerome Powell said the current artificial intelligence boom differs from the dot-com bubble because today’s leading companies—and here he seems to have been referring to the likes of Nvidia, Alphabet, Microsoft, and Meta, as opposed to the AI model makers such as OpenAI and Anthropic—actually generate profits. He also noted that the AI boom is driving tangible economic growth through investments in data centers and chips. (Although it should be said that the dot com bubble also fueled capital investment in fiber optics and networking equipment.) He contrasted this with the 1990s internet frenzy, when many high-valued firms collapsed after failing to turn a profit. You can read more from CNBC here.

Anthropic says cutting-edge AI models may have a kind of introspection. The AI company said its Claude Opus 4 and 4.1 models exhibit early signs of introspection—the ability to detect and describe aspects of their own internal states rather than just generate plausible text. In experiments, Anthropic researchers “injected” specific neural activation patterns that they knew were associated with particular concepts into the model at times when it was not considering topics related to those concepts. It then asked the model whether it noticed anything different about its thinking in these instances. The models were able to correctly identify some of these “thoughts” as not their own some of the time, indicating a limited form of self-monitoring, according to the Anthropic researchers. This introspective behavior, however, was highly inconsistent—occurring only about 20% of the time—and its underlying mechanisms remain unclear. Anthropic cautions that while intriguing, these findings do not imply human-like self-awareness but could help advance future work on model transparency and interpretability. You can read more in Anthropic’s blog post on the research here.

Study finds top AI models can’t construct predictive “world models.” A group of researchers from the non-profit AI lab the Basis Research Institute and affiliated with MIT, Harvard University, the University of Montreal, the University of Cambridge and Cornell University, built a new benchmark to test how leading LLMs perform at tasks that require understanding a virtual world, including discovering links between cause and effect and the “rules” by which the world operates. Their new “AutumnBench” involves a suite of 43 grid-world environments with 129 tasks, including predicting which objects are behind an obstruction, planning, and detecting what’s changed in a scene and the likely cause. They looked at how three state-of-the-art reasoning models— Anthropic’s Claude 4 Sonnet, Google’s Gemini 2.5 Pro, and OpenAI’s o3—compared against 517 human participants. They allowed the test subjects to spend some time exploring each virtual world and deploying strategies to figure out the rules of the world before testing them on the tasks. The results show that humans significantly outperform the AI models across all task types and environments. What’s more, they found that the models fail to adopt human-like strategies for determining the rules of the virtual worlds and how to perform the tasks, such as hypothesis-testing and updating their beliefs to account for new evidence. You can read the research paper here.

AI CALENDAR

Nov. 10-13: Web Summit, Lisbon. 

Nov. 26-27: World AI Congress, London.

Dec. 2-7: NeurIPS, San Diego.

Dec. 8-9: Fortune Brainstorm AI San Francisco. Apply to attend here.

EYE ON AI NUMBERS

$78.2 billion

That’s the amount that just Meta, Microsoft, and Alphabet collectively spent building new AI data centers and buying AI hardware in the three months between the end of June and the end of September. And all three companies signaled they plan to continue to ramp up that spending further over the next quarter and throughout 2026. You can read more here from the Financial Times. 



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4 times in 7 seconds: Trump calls Somali immigrants ‘garbage’

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He said it four times in seven seconds: Somali immigrants in the United States are “garbage.”

It was no mistake. In fact, President Donald Trump’s rhetorical attacks on immigrants have been building since he said Mexico was sending “rapists” across the border during his presidential campaign announcement a decade ago. He’s also echoed rhetoric once used by Adolf Hitler and called the 54 nations of Africa “s—-hole countries.” But with one flourish closing a two-hour Cabinet meeting Tuesday, Trump amped up his anti-immigrant rhetoric even further and ditched any claim that his administration was only seeking to remove people in the U.S. illegally.

“We don’t want ‘em in our country,” Trump said five times of the nation’s 260,000 people of Somali descent. “Let ’em go back to where they came from and fix it.” The assembled Cabinet members cheered and applauded. Vice President JD Vance could be seen pumping a fist. Defense Secretary Pete Hegseth, sitting to the president’s immediate left, told Trump on-camera, “Well said.”

The two-minute finale offered a riveting display in a nation that prides itself as being founded and enriched by immigrants, alongside an ugly history of enslaving millions of them and limiting who can come in. Trump’s U.S. Immigration and Customs Enforcement raids and deportations have reignited an age-old debate — and widened the nation’s divisions — over who can be an American, with Trump telling tens of thousands of American citizens, among others, that he doesn’t want them by virtue of their family origin.

“What he has done is brought this type of language more into the everyday conversation, more into the main,” said Carl Bon Tempo, a State University of New York at Albany history professor. “He’s, in a way, legitimated this type of language that, for many Americans for a long time, was seen as outside the bounds.”

A question that cuts to the core of American identity

Some Americans have long felt that people from certain parts of the world can never really blend in. That outsider-averse sentiment has manifested during difficult periods, such as anti-Chinese fear-mongering in the late 19th century and the imprisonment of some 120,000 Japanese Americans during World War II.

Trump, reelected with more than 77 million votes last year, has launched a whole-of-government drive to limit immigration. His order to end birthright citizenship — declaring that children born to parents who are in the United States illegally or temporarily are not American citizens despite the 14th Amendment — is being considered by the Supreme Court. He has largely frozen the country’s asylum system and drastically reduced the number of refugees it is allowed to admit. And his administration this week halted immigration applications for migrants from 19 travel-ban nations.

Immigration remains a signature issue for Trump, and he has slightly higher marks on it than on his overall job approval. According to a November AP-NORC poll, roughly 4 in 10 adults — 42% — approved of how the president is handling the issue, down from about half who approved in March. And Trump has pushed his agenda with near-daily crackdowns. On Wednesday, federal agents launched an immigration sweep in New Orleans,

There are some clues that Trump uses stronger anti-immigration rhetoric than many members of his own party. A study of 200,000 speeches in Congress and 5,000 presidential communications related to immigration between 1880 and 2020 found that the “most influential” words on the subject were terms like “enforce,” “terrorism” and “policy” from 1973 through Trump’s first presidential term.

The authors wrote in the Proceedings of the National Academy of Sciences that Trump is “the first president in modern American history to express sentiment toward immigration that is more negative than the average member of his own party.” And that was before he called thousands of Somalis in the U.S. “garbage.”

The U.S. president, embattled over other developments during the Cabinet meeting and discussions between Russian President Vladimir Putin and U.S. envoys, opted for harsh talk in his jam-packed closing.

Somali Americans, he said, “come from hell” and “contribute nothing.” They do “nothing but bitch” and “their country stinks.” Then Trump turned to a familiar target. Rep. Ilhan Omar, D-Minn., an outspoken and frequent Trump critic, “is garbage,” he said. “Her friends are garbage.”

His remarks on Somalia drew shock and condemnation from Minneapolis to Mogadishu.

“My view of the U.S. and living there has changed dramatically. I never thought a president, especially in his second term, would speak so harshly,” Ibrahim Hassan Hajji, a resident of Somalia’s capital city, told The Associated Press. “Because of this, I have no plans to travel to the U.S.”

Omar called Trump’s “obsession” with her and Somali-Americans “creepy and unhealthy.”

“We are not, and I am not, someone to be intimidated,” she said, “and we are not gonna be scapegoated.”

Trump’s influence on these issues is potent

But from the highest pulpit in the world’s biggest economy, Trump has had an undeniable influence on how people regard immigrants.

“Trump specializes in pushing the boundaries of what others have done before,” said César Cuauhtémoc García Hernández, a civil rights law professor at Ohio State University. “He is far from the first politician to embrace race-baiting xenophobia. But as president of the United States, he has more impact than most.” Domestically, Trump has “remarkable loyalty” among Republicans, he added. “Internationally, he embodies an aspiration for like-minded politicians and intellectuals.”

In Britain, attitudes toward migrants have hardened in the decade since Brexit, a vote driven in part by hostility toward immigrants from Eastern Europe. Nigel Farage, leader of the hard-right Reform U.K. party, has called unauthorized migration an “invasion” and warned of looming civil disorder.

France’s Marine Le Pen and her father built their political empire on anti-immigrant language decades before Trump entered politics. But the National Rally party has softened its rhetoric to win broader support. Le Pen often casts the issue as an administrative or policy matter.

In fact, what Trump said about people from Somalia would likely be illegal in France if uttered by anyone other than a head of state, because public insults based on a group’s national origin, ethnicity, race or religion are illegal under the country’s hate speech laws. But French law grants heads of state immunity.

One lawyer expressed concerns that Trump’s words will encourage other heads of state to use similar hate speech targeting people as groups.

“Comments saying that a population stinks — coming from a foreign head of state, a top world military and economic power — that’s never happened before,” said Paris lawyer Arié Alimi, who has worked on hate speech cases. “So here we are really crossing a very, very, very important threshold in terms of expressing racist … comments.”

But the “America first” president said he isn’t worried about others think of his increasingly polarizing rhetoric on immigration.

“I hear somebody say, ‘Oh, that’s not politically correct,’” Trump said, winding up his summation Tuesday. “I don’t care. I don’t want them.”

___

Contributing to this report are Associated Press writers Will Weissert and Linley Sanders in Washington, John Leicester in Paris, Jill Lawless in London, Evelyne Musambi in Nairobi, Kenya, and Omar Faruk in Mogadishu.



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Nearly three-quarters of Trump voters think the cost of living is bad or the worst ever

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President Donald Trump and his administration insist that costs are coming down, but voters are skeptical, including those who put him back in the White House.

Despite Republicans getting hammered on affordability in off-year elections last month, Trump continues to downplay the issue, contrasting with his message while campaigning last year.

“The word affordability is a con job by the Democrats,” Trump said during a Cabinet meeting on Tuesday. “The word affordability is a Democrat scam.”

But a new Politico poll found that 37% of Americans who voted for him in 2024 believe the cost of living is the worst they can ever remember, and 34% say it’s bad but can think of other times when it was worse.

The White House has said Trump inherited an inflationary economy from President Joe Biden and point to certain essentials that have come down since Trump began his second term, such as gasoline prices.

The poll shows that 57% of Trump voters say Biden still bears full or almost full responsibility for today’s economy. But 25% blame Trump completely or almost completely.

That’s as the annual rate of consumer inflation has steadily picked up since Trump launched his global trade war in April, and grocery prices have gained 1.4% between January and September.

Meanwhile, Vice President JD Vance pleaded for “patience” on the economy last month as Americans want to see prices decline, not just grow at a slower pace.

Even a marginal erosion in Trump’s electoral coalition could tip the scales in next year’s midterm elections, when the president will not be on the ballot to draw supporters.

A soft spot could be Republicans who don’t identify as “MAGA.” Among those particular voters, 29% said Trump has had a chance to change things in the economy but hasn’t taken it versus 11% of MAGA voters who said that.

Across all voters, 45% named groceries as the most challenging things to afford, followed by housing (38%) and health care (34%), according to the Politico poll.

The poll comes as wealthier households are having trouble affording basics, while discount retailers like Walmart and even Dollar Tree are seeing more higher-income customers.

And in a viral Substack post last month, Michael Green, chief strategist and portfolio manager for Simplify Asset Management, argued that the real poverty line should be around $140,000.

“If the crisis threshold—the floor below which families cannot function—is honestly updated to current spending patterns, it lands at $140,000,” he wrote. “What does that tell you about the $31,200 line we still use? It tells you we are measuring starvation.”



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Apple is experiencing its biggest leadership shakeup since Steve Jobs died, with over half a dozen key executives headed for the exits

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Apple is currently undergoing the most extensive executive overhaul in recent history, with a wave of senior leadership departures that marks the company’s most significant management realignment since its visionary co-founder and CEO Steve Jobs died in 2011. The leadership exodus spans critical divisions from artificial intelligence to design, legal affairs, environmental policy, and operations, which will have major repercussions for Apple’s direction for the foreseeable future.

On Thursday, Apple announced Lisa Jackson, its VP of environment, policy, and social initiatives, as well as Kate Adams, the company’s general counsel, will both retire in 2026. Adams has been Apple’s chief legal officer since 2017, and Jackson joined Apple in 2013. Adams will step down late next year, while Jackson will leave next month.

Jackson and Adams join a growing list of top executives who have either left or announced their exits this year. AI chief John Giannandrea announced his retirement earlier this month, and its design lead Alan Dye, who took charge of Apple’s all-important user interface design after Jony Ive left the company in 2019, was just poached by Mark Zuckerberg’s Meta this week.​

The scope of the turnover is unprecedented in the Tim Cook era. In July, Jeff Williams, Apple’s COO who was long thought to succeed Cook as CEO, decided to retire after 27 years with the company. One month later, Apple’s CFO Luca Maestri also decided to step back from his role. And the design division, which just lost Dye, also lost Billy Sorrentino, a senior design director, who left for Meta with Dye. Things have been particularly turbulent for Apple’s AI team, though: Ruoming Pang, who headed its AI Foundation Models Team, left for Meta in July and took about 100 engineers with him. Ke Yang, who led AI-driven web search for Siri, and Jian Zhang, Apple’s AI robotics lead, also both left for Meta.

Succession talks heat up

While all of these departures are a big deal for Apple, the timing may not be a coincidence. Both Bloomberg and the Financial Times have reported on Apple ramping up its succession plan efforts in preparation for Cook, who has led the company since 2011, to retire in 2026. Cook turned 65 in November and has grown Apple’s market cap from about $350 billion to a whopping $4 trillion under his tenure. Bloomberg reports John Ternus has emerged as the leading internal candidate to replace him.​

Apple choosing Ternus would be a pretty major departure from what’s worked for Apple during the past decade, which has been letting someone with an operational background and a strong grasp of the global supply chain lead the company. Ternus, meanwhile, is focused on hardware development, specifically for the iPhone, iPad, Mac, and Apple Watch. But it’s that technical expertise that’s made him an attractive candidate, especially as much of the recent criticism about Apple has revolved around the company entering new product categories (Vision Pro, but also the ill-fated Apple Car), as well as its struggling AI efforts.​

Now, of course, with so many executives leaving Apple, succession plans extend beyond the CEO role. Apple this week announced it’s bringing in Jennifer Newstead, who currently works as Meta’s chief legal officer, to replace Adams as the company’s general counsel starting March 1, 2026. Newstead is expected to handle both legal and government affairs, which is essentially a consolidation of responsibilities among Apple’s leadership team, merging Adams’ and Jacksons’ roles into one.​

Alan Dye, meanwhile, will be replaced by Stephen Lemay, a move that’s reportedly being celebrated within Apple and its design team in particular. John Gruber, who’s reported on Apple for decades and has deep ties within the company, wrote a pretty scathing critique about Dye, but in that same breath said employees are borderline “giddy” about Lemay—who has worked on every major Apple interface design since 1999, including the very first iPhone—taking over.

Meanwhile, on the AI team, John Giannandrea will be replaced by Amar Subramanya, who led AI strategy and development efforts at Google for about 16 years before a brief stint at Microsoft.

Hitting the reset button

All of the above departures cover critical functions for Apple: AI competitiveness, design innovation, regulatory navigation, and operational efficiency. Each replacement brings specialized expertise that aligns with the challenges Cook’s successor will inherit.

The real test will be execution across multiple fronts simultaneously. Can Subramanya accelerate Apple’s AI development to match competitive threats? Will Lemay’s design leadership maintain Apple’s interface advantages as AI reshapes user interaction? Can Newstead navigate regulatory challenges while preserving Apple’s privacy-first approach?

What’s certain is the company will look fundamentally different in 2026—and the executive team that grew Apple into a $4 trillion behemoth is departing. The transformation could be as profound as any since Jobs handed the reins to his COO at the time, Tim Cook, 14 years ago.



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