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AI is reshaping how Americans shop. Here’s how Target’s top tech leader says the retailer is adapting

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Prat Vemana, the chief information and product officer for Target, this week experienced something brand new as a shopper. He bought sleepwear through the retailer’s app in OpenAI’s ChatGPT.

The C-suite executive’s new shopping behavior reflects a seismic shift happening for retailers as they head into Black Friday and a holiday season that’s projected to surpass $1 trillion in spending for the first time in the U.S. Shoppers who have spent the past few decades migrating to web-based shops, then to mobile commerce, and shopping and discovery on TikTok and other social media platforms, are evolving again. They are now beginning to embrace artificial intelligence, including AI web browsers like ChatGPT Atlas from OpenAI and Comet from Perplexity, as yet another new way to shop.

“Whether it’s ChatGPT, Perplexity, or Gemini, we want to be there to help answer a question that the guest has,” says Vemana, who joined Target in 2022 with digital retail experience from big-box retailers The Home Depot and Staples. “The minute Target comes to their mind, we want to be there.”

By integrating with ChatGPT, Target is angling to get in front of the chatbot’s 800 million weekly active users with personalized recommendations from the retailer. Another generative AI bet that Target placed this month was the debut of an AI-powered gift finder that’s now on the company’s website and app, allowing shoppers to ask questions like “what’s a good present for my mother-in-law” and get a natural-language response.

While Target, which is ranked 41 on the Fortune 500, has already signaled to investors that it expects its ongoing sales struggles will continue through the holiday season, digital sales have been a bright spot. When Vemana joined the company from healthcare giant Kaiser Permanente, where he served as chief digital officer for three years, he was given a clear mandate from Target CEO Brian Cornell. “He said ‘Just get us to positive comps,’” recalls Vemana with a laugh.

By the fiscal first quarter of 2024, digital comparable sales were on the upswing and have increased for seven consecutive quarters, including a 2.4% gain for the fiscal third-quarter results that were reported last week. 

With wind behind his sails, Vemana’s responsibilities have also expanded to include CIO duties following the retirement of Brett Craig earlier this year. Vemana now oversees enterprise product technologies, engineering, infrastructure, and cybersecurity. 

Internal applications of AI include ChatGPT Enterprise, which has been rolled out to about 18,000 employees who are using the tool to ask questions, upload spreadsheets, and for summarization. Last week, OpenAI’s team visited Target’s corporate office, where 4,300 employees participated in ChatGPT-focused training sessions. Vemana says that 92% were satisfied with the experience.

In its stores, Target has rolled out a generative AI chatbot called Store Companion, which can help answer questions to make store operations run smoother or address a shopper’s questions. Vemana says he’s continuing to field input from associates to make improvements to Store Companion.

“Ultimately, we want to make sure that their experience in store is fully assisted with tech so that they can focus on the guest,” he says.

Target has already deployed several agentic AI use cases, with early areas of focus on handling customer service requests and improving IT workflows. Vemana is also rolling out a data science-led inventory management system that triangulates the complexity of a network of 2,000 Target stores with hundreds of thousands of products to more precisely match inventory levels with anticipated demand. 

“The models are evolving and learning,” says Vemana, noting that the early focus on this project are “frequency items” like cereal or a pack of underwear.

Target told investors this month that it would increase capital expenditures for the next fiscal year by an additional $1 billion, bringing the planned spending to about $5 billion on new store openings, remodels, and technology advancements. Tech’s core focus areas will be on supporting merchandising, supply chain, and store operations, though Vemana says he will share more details about his spending priorities in March 2026.

But he vows that technology will play a critical role in lifting Target’s overall sales.

“Not a single minute goes by without me thinking about growth,” says Vemana.

John Kell

Send thoughts or suggestions to CIO Intelligence here.

NEWS PACKETS

Anthropic rolls out a new AI model. Anthropic on Monday debuted a new version of the company’s LLM that the AI startup says is better at automating coding, deep research, reasoning, and mathematics skills than its predecessors. The new Claude Opus 4.5 is Anthropic’s third major model launch in just two months, highlighting the intense race among OpenAI, Google, and other AI model makers who are competing to offer the best AI technologies for enterprise clients. The Verge, meanwhile, points out that the latest Claude model “is harder to trick with prompt injection than any other frontier model in the industry.” This comes after Chinese hackers earlier this month were suspected of using Anthropic’s AI coding tool to breach dozens of organizations, including tech companies and government agencies.

Meanwhile, Google’s Gemini 3 is getting rave reviews. The new Gemini 3 AI model has been out for less than two weeks but already generating a lot of buzz, with Salesforce CEO Marc Benioff declaring on X that after using ChatGPT every day for three years, the executive spent two hours on Gemini 3 and vowed, “I’m not going back. The leap is insane.” Tech executives have been heaping praise, including OpenAI CEO Sam Altman, who privately told colleagues in an internal memo that Google’s update would create “temporary economic headwinds” for the ChatGPT maker, according to The Information.

Tech leaders depart at Airbnb, General Motors. Last week, rental platform Airbnb disclosed that CTO Ari Balogh would step down from his role in December but remain with the company through at least February to assist with the leadership transition. The company told Bloomberg that it will share more on those transition plans soon. Prior to joining Airbnb in 2018, Balogh was VP of engineering at Google. Separately, auto giant General Motors confirmed that Barak Turovsky, who had served as chief AI officer for less than nine months, would depart. The role was created with Turovsky’s hire and GM hasn’t yet said if the company would replace him, but did tell CIO Dive that the AI team would report to the manufacturing and engineering organization.

AI bubble chatter continues to swirl. Is the hype around AI beginning to deflate? Every news outlet from Fortune to NPR to Bloomberg has been weighing in with no clear consensus, though Nvidia CEO Jensen Huang says AI companies are in a no-win situation. “If we delivered a bad quarter, it is evidence there’s an AI bubble. If we delivered a great quarter, we are fueling the AI bubble,” he told employees, according to audio of an internal all-hands meeting reviewed by Business Insider. Alphabet CEO Sundar Pichai acknowledged in a recent interview with the BBC that there was some “irrationality” in the AI boom. And some have pointed to Oracle as, well, a potential oracle of the jitters. Oracle’s stock has tumbled 40% since September, when it signed a $300 billion OpenAI deal, though one of the main issues is that the cloud-software company is borrowing a lot of cash to fund its AI ambitions.

ADOPTION CURVE

CIOs are adding new skills and feeling more confident as they adopt AI. 61% of CIOs report that they felt they were ahead of their competitors on AI as full implementation of the technology increased to 42% from 11% in 2024, according to Salesforce’s second annual study that surveyed responses from 200 global CIOs from 24 countries. These CIOs are also extremely bullish on agentic AI: with 96% saying their company either currently uses this more autonomous form of the technology or plans to within the next two years. CIOs also report that they are dedicating 30% of their budget to agentic AI. (Salesforce, it’s worth noting, has made a big push as a vendor of agentic AI technology).

With the AI boom celebrating its third birthday (ChatGPT launched in November 2022), 75% of CIOs now report feeling more confident in their role than they did a year ago. They also report that they’ve personally improved their leadership, storytelling, and communications skills, and amid the move toward agentic, report working more closely with C-suite leaders like the CEO, CFO, and COO.

Shibani Ahuja, senior vice president of enterprise IT strategy at Salesforce, tells Fortune that the role of the CIO has evolved to facilitate more strategic conversations with other C-suite leaders about what business transformation will look like when enabled with AI. “CIOs are pushing the boundaries, because they are maybe two steps ahead of where others are,” says Ahuja. These technologists, she says, are more bold in challenging their C-suite peers in saying, “you’ve come up with a use case that automates from here-to-here. That’s simple. Do you really want to challenge that a bit more?”

Courtesy of Salesforce

JOBS RADAR

Hiring:

– Hardesty & Hanover Construction Services is seeking a CIO, based in New York City. Posted salary range: $200K-$250K/year.

– Charles B Wang Community Health Center is seeking a CIO, based in New York City. Posted salary range: $180K-$210K/year.

– Atomic Machines is seeking a head of IT, based in Emeryville, California. Posted salary range: $175K-$235K/year.

– StemWave is seeking a head of IT and business systems, based in Boston. Posted salary range: $130K-$170K/year.

Hired:

– Intel has appointed Cindy Stoddard to serve as SVP and CIO, effective December 1, and reporting directly to CEO Lip-Bu Tan to lead the chipmaker’s global IT organization. Stoddard joins Intel from Adobe, where she spent nine years leading global IT and cloud operations. Prior to Adobe, she held senior technology leadership roles at companies including data infrastructure company NetApp and grocery retailer Safeway.

– Guidehousenamed Ron White as CIO, joining the consulting firm to lead internal IT operations, cybersecurity and cloud-first initiatives. Previously, White served as CIO at IT consultancy Avanade, CIO at glass bottle manufacturer O-I Glass, and as a managing director at consulting giant Accenture.

– FormAssemblyannounced that Bryan O’Neill has been promoted to CTO. O’Neill first joined the web form builder company in June 2024 as VP of engineering and has played a key role in expanding FormAssembly’s AI strategy. Prior to that, he served as SVP of technical operations at tech company Babel Street and held senior engineering roles at GMAC Insurance, Lowe’s, and Anheuser-Busch.

– Gallion Health appointed Mathieu Baissac as CTO, joining the health-technology company after it was spun out from the University of Maryland Medical System in July to commercialize its hospital supply chain management software. Baissac previously held senior director roles at healthcare companies Phreesia and Kyruus and as a VP of product management at software firm Flexera Software.



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Netflix–Warner Bros. deal sets up $72 billion antitrust test

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December 5, 2025

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Netflix Inc. has won the heated takeover battle for Warner Bros. Discovery Inc. Now it must convince global antitrust regulators that the deal won’t give it an illegal advantage in the streaming market. 

The $72 billion tie-up joins the world’s dominant paid streaming service with one of Hollywood’s most iconic movie studios. It would reshape the market for online video content by combining the No. 1 streaming player with the No. 4 service HBO Max and its blockbuster hits such as Game Of Thrones, Friends, and the DC Universe comics characters franchise.  

That could raise red flags for global antitrust regulators over concerns that Netflix would have too much control over the streaming market. The company faces a lengthy Justice Department review and a possible US lawsuit seeking to block the deal if it doesn’t adopt some remedies to get it cleared, analysts said.

“Netflix will have an uphill climb unless it agrees to divest HBO Max as well as additional behavioral commitments — particularly on licensing content,” said Bloomberg Intelligence analyst Jennifer Rie. “The streaming overlap is significant,” she added, saying the argument that “the market should be viewed more broadly is a tough one to win.”

By choosing Netflix, Warner Bros. has jilted another bidder, Paramount Skydance Corp., a move that risks touching off a political battle in Washington. Paramount is backed by the world’s second-richest man, Larry Ellison, and his son, David Ellison, and the company has touted their longstanding close ties to President Donald Trump. Their acquisition of Paramount, which closed in August, has won public praise from Trump. 

Comcast Corp. also made a bid for Warner Bros., looking to merge it with its NBCUniversal division.

The Justice Department’s antitrust division, which would review the transaction in the US, could argue that the deal is illegal on its face because the combined market share would put Netflix well over a 30% threshold.

The White House, the Justice Department and Comcast didn’t immediately respond to requests for comment. 

US lawmakers from both parties, including Republican Representative Darrell Issa and Democratic Senator Elizabeth Warren have already faulted the transaction — which would create a global streaming giant with 450 million users — as harmful to consumers.

“This deal looks like an anti-monopoly nightmare,” Warren said after the Netflix announcement. Utah Senator Mike Lee, a Republican, said in a social media post earlier this week that a Warner Bros.-Netflix tie-up would raise more serious competition questions “than any transaction I’ve seen in about a decade.”

European Union regulators are also likely to subject the Netflix proposal to an intensive review amid pressure from legislators. In the UK, the deal has already drawn scrutiny before the announcement, with House of Lords member Baroness Luciana Berger pressing the government on how the transaction would impact competition and consumer prices.

The combined company could raise prices and broadly impact “culture, film, cinemas and theater releases,”said Andreas Schwab, a leading member of the European Parliament on competition issues, after the announcement.

Paramount has sought to frame the Netflix deal as a non-starter. “The simple truth is that a deal with Netflix as the buyer likely will never close, due to antitrust and regulatory challenges in the United States and in most jurisdictions abroad,” Paramount’s antitrust lawyers wrote to their counterparts at Warner Bros. on Dec. 1.

Appealing directly to Trump could help Netflix avoid intense antitrust scrutiny, New Street Research’s Blair Levin wrote in a note on Friday. Levin said it’s possible that Trump could come to see the benefit of switching from a pro-Paramount position to a pro-Netflix position. “And if he does so, we believe the DOJ will follow suit,” Levin wrote.

Netflix co-Chief Executive Officer Ted Sarandos had dinner with Trump at the president’s Mar-a-Lago resort in Florida last December, a move other CEOs made after the election in order to win over the administration. In a call with investors Friday morning, Sarandos said that he’s “highly confident in the regulatory process,” contending the deal favors consumers, workers and innovation. 

“Our plans here are to work really closely with all the appropriate governments and regulators, but really confident that we’re going to get all the necessary approvals that we need,” he said.

Netflix will likely argue to regulators that other video services such as Google’s YouTube and ByteDance Ltd.’s TikTok should be included in any analysis of the market, which would dramatically shrink the company’s perceived dominance.

The US Federal Communications Commission, which regulates the transfer of broadcast-TV licenses, isn’t expected to play a role in the deal, as neither hold such licenses. Warner Bros. plans to spin off its cable TV division, which includes channels such as CNN, TBS and TNT, before the sale.

Even if antitrust reviews just focus on streaming, Netflix believes it will ultimately prevail, pointing to Amazon.com Inc.’s Prime and Walt Disney Co. as other major competitors, according to people familiar with the company’s thinking. 

Netflix is expected to argue that more than 75% of HBO Max subscribers already subscribe to Netflix, making them complementary offerings rather than competitors, said the people, who asked not to be named discussing confidential deliberations. The company is expected to make the case that reducing its content costs through owning Warner Bros., eliminating redundant back-end technology and bundling Netflix with Max will yield lower prices.



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The rise of AI reasoning models comes with a big energy tradeoff

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December 5, 2025

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Nearly all leading artificial intelligence developers are focused on building AI models that mimic the way humans reason, but new research shows these cutting-edge systems can be far more energy intensive, adding to concerns about AI’s strain on power grids.

AI reasoning models used 30 times more power on average to respond to 1,000 written prompts than alternatives without this reasoning capability or which had it disabled, according to a study released Thursday. The work was carried out by the AI Energy Score project, led by Hugging Face research scientist Sasha Luccioni and Salesforce Inc. head of AI sustainability Boris Gamazaychikov.

The researchers evaluated 40 open, freely available AI models, including software from OpenAI, Alphabet Inc.’s Google and Microsoft Corp. Some models were found to have a much wider disparity in energy consumption, including one from Chinese upstart DeepSeek. A slimmed-down version of DeepSeek’s R1 model used just 50 watt hours to respond to the prompts when reasoning was turned off, or about as much power as is needed to run a 50 watt lightbulb for an hour. With the reasoning feature enabled, the same model required 7,626 watt hours to complete the tasks.

The soaring energy needs of AI have increasingly come under scrutiny. As tech companies race to build more and bigger data centers to support AI, industry watchers have raised concerns about straining power grids and raising energy costs for consumers. A Bloomberg investigation in September found that wholesale electricity prices rose as much as 267% over the past five years in areas near data centers. There are also environmental drawbacks, as Microsoft, Google and Amazon.com Inc. have previously acknowledged the data center buildout could complicate their long-term climate objectives. 

More than a year ago, OpenAI released its first reasoning model, called o1. Where its prior software replied almost instantly to queries, o1 spent more time computing an answer before responding. Many other AI companies have since released similar systems, with the goal of solving more complex multistep problems for fields like science, math and coding.

Though reasoning systems have quickly become the industry norm for carrying out more complicated tasks, there has been little research into their energy demands. Much of the increase in power consumption is due to reasoning models generating much more text when responding, the researchers said. 

The new report aims to better understand how AI energy needs are evolving, Luccioni said. She also hopes it helps people better understand that there are different types of AI models suited to different actions. Not every query requires tapping the most computationally intensive AI reasoning systems.

“We should be smarter about the way that we use AI,” Luccioni said. “Choosing the right model for the right task is important.”

To test the difference in power use, the researchers ran all the models on the same computer hardware. They used the same prompts for each, ranging from simple questions — such as asking which team won the Super Bowl in a particular year — to more complex math problems. They also used a software tool called CodeCarbon to track how much energy was being consumed in real time.

The results varied considerably. The researchers found one of Microsoft’s Phi 4 reasoning models used 9,462 watt hours with reasoning turned on, compared with about 18 watt hours with it off. OpenAI’s largest gpt-oss model, meanwhile, had a less stark difference. It used 8,504 watt hours with reasoning on the most computationally intensive “high” setting and 5,313 watt hours with the setting turned down to “low.” 

OpenAI, Microsoft, Google and DeepSeek did not immediately respond to a request for comment.

Google released internal research in August that estimated the median text prompt for its Gemini AI service used 0.24 watt-hours of energy, roughly equal to watching TV for less than nine seconds. Google said that figure was “substantially lower than many public estimates.” 

Much of the discussion about AI power consumption has focused on large-scale facilities set up to train artificial intelligence systems. Increasingly, however, tech firms are shifting more resources to inference, or the process of running AI systems after they’ve been trained. The push toward reasoning models is a big piece of that as these systems are more reliant on inference.

Recently, some tech leaders have acknowledged that AI’s power draw needs to be reckoned with. Microsoft CEO Satya Nadella said the industry must earn the “social permission to consume energy” for AI data centers in a November interview. To do that, he argued tech must use AI to do good and foster broad economic growth.



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SpaceX to offer insider shares at record-setting valuation

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December 5, 2025

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SpaceX is preparing to sell insider shares in a transaction that would value Elon Musk’s rocket and satellite maker at a valuation higher than OpenAI’s record-setting $500 billion, people familiar with the matter said.

One of the people briefed on the deal said that the share price under discussion is higher than $400 apiece, which would value SpaceX at between $750 billion and $800 billion, though the details could change. 

The company’s latest tender offer was discussed by its board of directors on Thursday at SpaceX’s Starbase hub in Texas. If confirmed, it would make SpaceX once again the world’s most valuable closely held company, vaulting past the previous record of $500 billion that ChatGPT owner OpenAI set in October. Play Video

Preliminary scenarios included per-share prices that would have pushed SpaceX’s value at roughly $560 billion or higher, the people said. The details of the deal could change before it closes, a third person said. 

A representative for SpaceX didn’t immediately respond to a request for comment. 

The latest figure would be a substantial increase from the $212 a share set in July, when the company raised money and sold shares at a valuation of $400 billion.

The Wall Street Journal and Financial Times, citing unnamed people familiar with the matter, earlier reported that a deal would value SpaceX at $800 billion.

News of SpaceX’s valuation sent shares of EchoStar Corp., a satellite TV and wireless company, up as much as 18%. Last month, Echostar had agreed to sell spectrum licenses to SpaceX for $2.6 billion, adding to an earlier agreement to sell about $17 billion in wireless spectrum to Musk’s company.

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The world’s most prolific rocket launcher, SpaceX dominates the space industry with its Falcon 9 rocket that launches satellites and people to orbit.

SpaceX is also the industry leader in providing internet services from low-Earth orbit through Starlink, a system of more than 9,000 satellites that is far ahead of competitors including Amazon.com Inc.’s Amazon Leo.

SpaceX executives have repeatedly floated the idea of spinning off SpaceX’s Starlink business into a separate, publicly traded company — a concept President Gwynne Shotwell first suggested in 2020. 

However, Musk cast doubt on the prospect publicly over the years and Chief Financial Officer Bret Johnsen said in 2024 that a Starlink IPO would be something that would take place more likely “in the years to come.”

The Information, citing people familiar with the discussions, separately reported on Friday that SpaceX has told investors and financial institution representatives that it is aiming for an initial public offering for the entire company in the second half of next year.

A so-called tender or secondary offering, through which employees and some early shareholders can sell shares, provides investors in closely held companies such as SpaceX a way to generate liquidity.

SpaceX is working to develop its new Starship vehicle, advertised as the most powerful rocket ever developed to loft huge numbers of Starlink satellites as well as carry cargo and people to moon and, eventually, Mars.



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