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An MIT report finding 95% of AI pilots fail spooked investors. It should have spooked C-suite execs instead.

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Hello and welcome to Eye on AI…In this edition: DeepSeek drops another impressive model…China tells companies not to buy Nvidia chips…and OpenEvidence scores an impressive result on the medical licensing exam.

Hi, it’s Jeremy here, just back from a few weeks of much needed vacation. It was nice to be able to get a little distance and perspective on the AI news cycle. (Although I did make an appearance on Rana el Kaliouby’s “Pioneers of AI” podcast to discuss the launch of GPT-5. You can check that out here.)

Returning this week, the news has been all about investor fears we’re in an “AI bubble”—and that it is about to either pop or deflate. Nervous investors drove the shares of many publicly-traded tech companies linked to AI-related trades, such as Nvidia, CoreWeave, Microsoft, and Alphabet down significantly this week.

To me, one of the clearest signs that we are in a bubble—at least in terms of publicly-traded AI stocks—is the extent to which investors are actively looking for reasons to bail. Take the supposed rationale for this week’s sell-off, which were Altman’s comments that he thought there was an AI bubble in venture-backed, privately-held AI startups and that MIT report which found that 95% of AI pilots fail. Altman wasn’t talking about the public companies that stock market investors have in their portfolios, but traders didn’t care. They chose to only read the headlines and interpret Altman’s remarks broadly. As for that MIT report, the market chose to read it as an indictment of AI as a whole and head for the exits—even though that’s not exactly what the research said, as we’ll see in a moment.

I’m going to spend the rest of this essay on the MIT report because I think it is relevant for Eye on AI readers beyond its implications for investors. The report looked at what companies are actually trying to do with AI and why they may not be succeeding. Entitled The GenAI Divide: State of AI in Business 2025, the report was published by MIT Media Lab’s NANDA Initiative. (My Fortune colleague Sheryl Estrada was one of the first to cover the report’s findings. You can read her coverage here.)

NANDA is an acronym for “Networked-Agents and Decentralized AI” and it is a project designed to create new protocols and a new architecture for an internet full of autonomous AI agents. NANDA might have an incentive to suggest that current AI methods aren’t working—but that if companies created more agentic AI systems using the NANDA protocol, their problems would disappear. There’s no indication that NANDA did anything to skew its survey results or to frame them in a particular light, but it is always important to consider the source.

Ok, now let’s look at what the report actually says. It interviewed 150 executives, surveyed 350 employees, and looked at 300 individual AI projects. It found that 95% of AI pilot projects failed to deliver any discernible financial savings or uplift in profits. These findings are not actually all that different from what a lot of previous surveys have found—and those surveys had no negative impact on the stock market. Consulting firm Capgemini found in 2023 that 88% of AI pilots failed to reach production. (S&P Global found earlier this year that 42% of generative AI pilots were abandoned—which is still not great).

You’re doing it wrong

But where it gets interesting is what the NANDA study said about the apparent reasons for these failures. The biggest problem, the report found, was not that the AI models weren’t capable enough (although execs tended to think that was the problem.) Instead, the researchers discovered a “learning gap—people and organizations simply did not understand how to use the AI tools properly or how to design workflows that could capture the benefits of AI while minimizing downside risks.

Large language models seem simple—you can give them instructions in plain language, after all. But it takes expertise and experimentation to embed them in business workflows. Wharton professor Ethan Mollick has suggested that the real benefits of AI will come when companies abandon trying to get AI models to follow existing processes—many of which he argues reflect bureaucracy and office politics more than anything else—and simply let the models find their own way to produce the desired business outcomes. (I think Mollick underestimates the extent to which processes in many large companies reflect regulatory demands, but he no doubt has a point in many cases.)

This phenomenon may also explain why the MIT NANDA research found that startups, which often don’t have such entrenched business processes to begin with, are much more likely to find genAI can deliver ROI.

Buy, don’t build

The report also found that companies which bought-in AI models and solutions were more successful than enterprises that tried to build their own systems. Purchasing AI tools succeeded 67% of the time, while internal builds panned out only one-third as often. Some large organizations, especially in regulated industries, feel they have to build their own tools for legal and data privacy reasons. But in some cases organizations fetishize control—when they would be better off handing the hard work off to a vendor whose entire business is creating AI software.

Building AI models or systems from scratch requires a level of expertise many companies don’t have and can’t afford to hire. It is also means that companies are building their AI systems on open source or open weight LLMs—and while the performance of these models has improved markedly in the past year, most open source AI models still lag their proprietary rivals. And when it comes to using AI in actual business cases, a 5% difference in reasoning abilities or hallucination rates can result in a substantial difference in outcomes.

Finally, the MIT report found that many companies are deploying AI in marketing and sales, when the tools might have a much bigger impact if used to take costs out of back-end processes and procedures. This too may contribute to AI’s missing ROI.

The overall thrust of the MIT report was that the problem was not the tech. It was how companies were using the tech. But that’s not how the stock market chose to interpret the results. To me, that says more about the irrational exuberance in the stock market than it does about the actual impact AI will have on business in five years time. 

With that, here’s the rest of the AI news.

Jeremy Kahn
jeremy.kahn@fortune.com
@jeremyakahn

FORTUNE ON AI

Why the NFL drafted Microsoft’s gen AI for the league’s next big play—by John Kell

OpenAI’s chairman says ChatGPT is ‘obviating’ his own job—and says AI is like an ‘Iron Man suit’ for workers—by Marco Quiroz-Gutierrez

Meta wants to speed its race to ‘superintelligence’—but investors will still want their billions in ad revenue—by Sharon Goldman

AI IN THE NEWS

China moves to restrict Nvidia H20 sales after Lutnick remarks. That’s according a story in the Financial Times that said Beijing had found U.S. Commerce Secretary Howard Lutnick’s comments that the U.S. was withholding its best technology from China to be “insulting.” CAC, China’s internet regulator, issued an informal notice to major tech companies such as ByteDance and Alibaba, asking them to halt new orders for Nvidia H20s. MIIT, the country’s telecom and software regulator, and the NDRC, the state planning agency which is leading a drive for tech independence, have also issued guidance telling companies not to purchase Nvidia chips. The agencies have cited security concerns as the rationale for their stance, but unnamed Chinese officials told the newspaper that Lutnick’s comments also played a role.

DeepSeek launches its V3.1 model to enthusiastic reviews. The Chinese frontier AI company released an updated version of its powerful V3 LLM open source AI model. V3.1 features a larger context window than its predecessor, meaning it can handle longer prompts and more data. It also uses a hybrid architecture that only activates a fraction of its 685 billion parameters for each prompt token, making it faster and more efficient than some rival models. It also features better reasoning and agentic capabilities than the original V3, which was the underlying model DeepSeek then used to create its wildly successful R1 reasoning model. On benchmark tests so far, the V3.1 is competitive with proprietary models from OpenAI, Google, and Anthropic at a much lower price point—just over $1 for some coding tasks compared to $70 for rivals. Read more from Bloomberg here.

Google unveils its latest Pixel phones full of AI features. Google unveiled its Pixel 10 smartphone lineup, heavily centered on its Gemini AI assistant. The phones have features such as “Magic Cue” that provides suggested next actions based on contextual information, an AI “Camera Coach” for smarter photography, and Gemini Live for real-time screen interactions. The new AI features may allow Google to gain some marketshare from Apple, which has delayed the roll-out of many AI features for its iPhones until 2026. You can read more from CNBC here.

OpenAI considers renting AI infrastructure to others. OpenAI CFO Sara Friar told Bloomberg that the company is considering renting out AI-optimized data centers and infrastructure to other companies in the future, similar to Amazon’s AWS—even though OpenAI currently struggles to find enough data center capacity for its own operations. Friar also said the company is exploring financing options beyond debt as it faces immense costs, with CEO Sam Altman predicting trillions of dollars in future data center spending. Friar also confirmed in an interview with CNBC that the company recently hit $1 billion in monthly revenue for the first time, while Bloomberg reported that secondary share sales have valued the company at $500 billion.

AI CALENDAR

Sept. 8-10: Fortune Brainstorm Tech, Park City, Utah. Apply to attend here.

Oct. 6-10: World AI Week, Amsterdam

Oct. 21-22: TedAI San Francisco. Apply to attend here.

Dec. 2-7: NeurIPS, San Diego

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

EYE ON AI NUMBERS

100%

That’s the score medical AI startup OpenEvidence says its new AI model achieved on the U.S. Medical Licensing Exam (USMLE), the three-part exam all new doctors must take before they can practice. This beats the 90% its model scored two years ago as well as the 97% that OpenAI’s GPT-5 recently scored. OpenEvidence says its model offers case-based, literature-grounded explanations for its answers and the startup is offering the model to medical students as a free educational tool through a partnership with the American Medical Association, its associated journal, and the New England Journal of Medicine. You can read more from the healthcare-focused publication Fierce Healthcare here.

This is the online version of Eye on AI, Fortune’s weekly newsletter on how AI is shaping the future of business. Sign up for free.



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‘This isn’t what Walt and Roy would have wanted’: Disney fans with disabilities sue over new ride restrictions

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Changes that Disney made to a popular program that lets qualifying disabled people skip long lines at its California and Florida theme parks are too restrictive, disabled fans contend in a federal lawsuit and shareholder proposal that seek to expand eligibility.

The battle over who can skip long lines on popular rides because of their disabilities marks the latest struggle by Disney to accommodate disabled visitors while cracking down on past abuses. But some Disney fans say the company has gone too far and has no right to determine who is disabled.

“This isn’t right. This isn’t what Walt and Roy would have wanted,” said Shannon Bonadurer, referring to the Disney brothers who founded the entertainment empire. Despite being unable to wait for long periods of time in the heat because she uses an ileostomy bag, Bonadurer was denied a pass for the disability program.

In a statement, Disney said it was committed to providing a great experience to all visitors, particularly those with disabilities who may require special accommodations.

Here’s a look at changes to Disney parks’ policies for disabled visitors.

What is the disability program?

The Disability Access Service, or DAS, program allows pass-holders and their immediate family members to make an online reservation for a ride while in the park and then get into an expedited line that typically takes about 10 minutes when it’s their time to go on the ride. DAS guests never have to wait in normal standby lines, which on the most popular attractions can be two hours or more.

The DAS program started in 2013 in response to past abuses by disabled “tour guides” who charged money, sometimes hundreds of dollars, to accompany able-bodied guests, enabling such guests to go to the front of lines. Disney says the DAS program needed changing because it had grown fourfold. Before last year’s changes, the percentage of guests having DAS passes jumped from around 5% to 20% over the past dozen years “and showed no signs of slowing,” the company said in court papers.

Disney parks make other accommodations for disabled visitors, including maps in Braille, a device that helps transfer visitors from wheelchairs to ride seats, quiet break locations and American Sign Language interpreters for some live shows. The parks permit some service animals on rides and allow some disabled guests to leave a line and rejoin their party before boarding a ride.

Who qualifies now?

Disney narrowed the scope from people with a wider range of disabilities to mostly guests who “due to a developmental disability such as autism or similar” have difficulties waiting in a long line. Under the changes, guests seeking a DAS pass must be interviewed via video chat by a Disney worker and a contracted medical professional who determine if the person is eligible. Visitors found to have lied can be barred from the parks.

Some people with disabilities who have been denied say the new policy is too restrictive. Not only was Bonadurer denied a pass, but so was her 25-year-old son, who is blind and has cerebral palsy and autism.

“They are making a determination about whether you’re disabled enough,” said Bonadurer, a professional travel adviser from Michigan. “I would love to wait in line with everyone else, and so would my son, since that would mean he has a normal life. But we don’t, and unfortunately for us, we need adaptations to how we wait.”

Disney says the Americans with Disabilities Act doesn’t require equal treatment of people with varying disabilities. The company accommodates those visitors who don’t meet the new DAS criteria with alternatives, Disney said in court filings responding to a federal lawsuit in California.

“For example, in a crowded movie theater, a person using a wheelchair may be entitled to priority seating even if they arrive shortly before the movie starts, while a deaf person may only be entitled to a seat with closed captioning,” the company said.

At Disney’s main theme park rival, Universal, disabled visitors can get shorter lines if they have a card issued by an international board that certifies venues for their accessibility.

What’s next?

A shareholder proposal submitted on behalf of DAS Defenders, an advocacy group of Disney fans opposed to the DAS changes, calls on the company next year to commission an independent review of its disability policies and publicly release the findings. The shareholder proposal claims the change to the DAS program has contributed to lower park attendance.

Disney’s attorneys told the Securities and Exchange Commission in a November letter that it intends to block the proposal ahead of the company’s 2026 shareholder meeting, saying it was false and misleading about the reasons for an attendance decline, which the company attributed to hurricanes. The company also argued the shareholder proposal amounts to micromanaging day-to-day operations.



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Kushner suddenly enters the Paramount–Netflix fight with Saudi billions and a fresh mega-deal

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Jared Kushner has quietly reemerged as a player in one of the biggest takeover fights in modern Hollywood. Paramount’s audacious, all-cash $108 billion hostile bid for Warner Bros. Discovery, announced Monday, names Kushner’s fully owned private equity firm, Affinity Partners, as one of four outside financing partners backing the offer, alongside the sovereign wealth funds of Saudi Arabia, Abu Dhabi, and Qatar.

Axios first reported the involvement of Saudi and Gulf investment.

The detail is buried in Paramount’s tender offer, with Paramount listing “the Public Investment Fund (Kingdom of Saudi Arabia), L’imad Holding Company PJSC (Abu Dhabi), Qatar Investment Authority (Qatar) and Affinity Partners (Jared Kushner)” as investors who would, under a successful deal scenario, hold non-voting equity and forgo governance rights, including board seats. 

The filing also states that because these investors are structured without such rights, “the Transaction will not be within CFIUS’s jurisdiction,” referring to the Committee on Foreign Investment in the United States. Reports have suggested that WBD’s board opted for Netflix’s deal as it lacked any foreign financing components and therefore faced no issues with CFIUS, a notably opaque and powerful antitrust tool that the government can employ to block controversial mergers.

Both Paramount and Netflix are likely to increase their offers. David Ellison said on CNBC that he told the CEO of Warner Bro’s, David Zaslav, that $30 per share wasn’t the company’s best and final offer.

Kushner’s Middle Eastern ties

Kushner’s inclusion reflects a broader fact pattern: since leaving government, his firm has raised several billion dollars from Gulf investors and has participated in large private transactions involving capital from the same region. In September, his firm joined Silver Lake and Saudi Arabia’s Public Investment Fund in the $55 billion agreement to take Electronic Arts private, the largest private-equity buyout in history. 

WSJ reporting shows Kushner helped connect Silver Lake with PIF leadership earlier in the year as discussions around an EA buyout accelerated. Affinity Partners ultimately took a roughly 5% stake in the transaction, alongside Silver Lake and PIF, which financed the majority of the equity. The EA deal marked the first time Kushner’s fund appeared in a major global technology buyout of that scale, and it involved the same Gulf investors who now appear in Paramount’s financing package.

Kushner has also remained active in Middle East political diplomacy, not just financial. He played a meaningful role in the administration’s recent Israel-Gaza peace effort, brought in because of his involvement in negotiating the Abraham Accords during Trump’s first term, which established diplomatic ties between Israel and several Gulf states including Saudi Arabia. The Gulf state is increasingly opening up, especially with regard to western businesses, as highlighted by Barclays’ confirmation in late October at the Fortune Global Forum in Riyadh that it was relocating its regional headquarters there. Separately at the Fortune Global Forum, Saudi Investment Minister Khalid A. Al-Falih described the breakthroughs occurring under Vision 2030, the kingdom’s economic transformation plan that is roughly nine years old. He said he saw 2025 as a “pivotal moment,” when “the very foundations of global business are being shaken, in a way, and being rewritten before our own eyes.”

The deal took on new political dimensions over the weekend, with President Donald Trump publicly weighing in on Netflix’s agreement to acquire WBD’s studio and streaming assets. Speaking to reporters on Sunday, Trump said the Netflix–WBD deal “could be a problem” because of the combined businesses’ market share, and noted that he expects to be involved in the review process. He also confirmed meeting with Netflix co-CEO Ted Sarandos in the Oval Office shortly before the deal was announced by Netflix, saying Sarandos had made “no guarantees” about the transaction. 

Trump did not confirm the scoop by Bloomberg’s Lucas Shaw, who wrote in his influential entertainment newsletter that Sarandos has been wooing Trump since late November, when he visited Mar-A-Lago. Trump did indicate, however, that he has a good relationship with the Netflix leader, calling Sarandos a “fantastic man” who had played a major role in building Netflix into such a great company. Netflix executives expressed great confidence in regulatory approval on Friday’s call with analysts about their deal, worth $72 billion in equity and about $83 billion including the assumption of debt.

The political plot thickens

The political overtones of the wrangling here are at least worth noting. Paramount was recently acquired by David Ellison, son of longtime Republican donor Larry Ellison, who Trump named as one of several U.S. billionaires to take control of the U.S. assets of TikTok. (Bloomberg’s Shaw reported that Sarandos was interested in the Paramount studio before Ellison acquired it.) Meanwhile, Sarandos is married to Nicole Avant, who was ambassador to the Bahamas during the Obama administration. Netflix co-founder Reed Hastings is a prominent and longtime Democratic donor, although Hastings is now non-executive chairman at Netflix and has been focused on his Powder Mountain resort in Utah, acquired shortly after Fortune’s profile of the resort in 2023.

Paramount explicitly argued that its own proposal carries fewer regulatory risks than Netflix’s. In its filing, the company contends that the Netflix agreement faces significant antitrust hurdles, including a long potential review timeline. Paramount also emphasizes that its outside financing—because it is non-voting—does not trigger CFIUS review, eliminating one additional hurdle of national-security scrutiny.

Trump’s posture toward Paramount, however, has been mixed. Roughly 20 minutes after Paramount launched its hostile offer, Trump explicitly criticized Paramount management over a 60 Minutes segment featuring Rep. Marjorie Taylor Greene, writing on Truth Social that it was “NO BETTER THAN THE OLD OWNERSHIP.” Trump added that “since they [Paramount] bought it, 60 Minutes has actually gotten WORSE!” CBS News and 60 Minutes, as is customary with news organizations, maintain that they have editorial independence from their ownership. Paramount settled a lawsuit brought by Trump over a certain 60 Minutes episode during the 2024 election, paying $16 million in July 2025, shortly before Ellison’s takeover won regulator approval.

Separately on Monday, Larry Ellisontold CNBC that he has had “great conversations” with Trump about the WBD bid, without elaborating. 

Nidhi Hegde, executive director of the American Economic Liberties Project, wrote on X in response to Ellison’s remarks that “the correct option is neither Paramount nor Netflix buy Warner.”

“The president inserting himself in the deal is obviously problematic, regardless of the parties involved,” said Hegde. 

[Disclosure: one of the author’s worked at Netflix from June 2024 through July 2025.]



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Baby boomers have ‘gobbled up’ the wealth share, leaving Gen Z to wait for Great Wealth Transfer

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Older Americans may be trading in hustling for retirement, but that hasn’t stopped them from getting richer.

Baby boomers now hold a record high of the United States’ wealth, Apollo chief economist Torsten Slok noted in a Sunday blog post, citing Federal Reserve data. Compared to 1989, when those over 70 years old held 19% of the wealth in the household sector, older Americans now own 31% of the wealth.

That chunk of change is an outsized share compared to other generations. Baby boomers, who make up about 20% of the U.S. population, hold more than $85 trillion in assets, according to Fed data. By comparison, millennials, who make up about the same percentage of Americans, hold just about $18 trillion, roughly one-fifth that of baby boomers. 

Older Americans’ financial success is in especially stark comparison to that of Gen Z, a generation with deep skepticism about the economic future, who feel shut out from entry-level jobs amid the rise of AI, with many sinking into credit card debt as they struggle to repay student loans. As of last year, the young generation had only $6 trillion in wealth, despite making up the same percentage of the population as their baby boomer and millennial counterparts.

“The baby [boomer] generation has really gobbled up a huge share of household wealth, so it’s left a lot less for other age cohorts,” Edward Wolff, professor of economics at New York University, told Fortune.

Baby boomers’ good timing

America’s septuagenarians were raised by parents who came of age during the Great Depression and learned the hard way the lessons of frugality and the importance of saving money. But the baby boomer generation owes a great deal of their financial security to the stars aligning during their formative years.

In the 1970s when many baby boomers entered the housing market, inflation surged, making buying a home an appealing investment. As home values soared in the following decades, so, too, did the generation’s equity. The older generation has also been boosted by stock ownership, with baby boomers holding 54% of stocks worth more than $25 trillion, according to an early 2025 analysis of Fed data by The Motley Fool. Millennials owned about 8% of stocks worth $3.9 trillion.

But Gen Z, who may be following baby boomers’ lead in stock market investments, have not shared the same good fortune in the housing market. Housing supply has been low since the 2008 recession, exacerbated by sky-high mortgage rates, which disincentivized home sales and contributed to exorbitant home prices.

As a result, 2025 saw a 21% drop in the share of first-time homebuyers, and the age of those buyers reached a record high of 40 years, according to November data from the National Association of Realtors, leaving Gen Z to wait a little longer for the keys to their first homes. A March Redfin report found today, just 33% of 27-year-olds own their homes compared to 40% of baby boomers who owned their homes when they were the same age.

“They weren’t able to enjoy the big appreciation of house prices to the same extent as baby boomers,” Wolff said.

Gen Z’s silver lining

Gen Z may be facing generation-defining economic challenges, but there’s hope for them yet. Pew Research Center data from 2024 indicates Gen Z may actually be in better financial shape than young people in past generations: In 2023, Zoomers made a median pay of about $20,000, adjusted for inflation. In 1993, 18-to-24-year-olds made about $15,000. Income growth finally outpacing home price growth may also be a silver lining for prospective home buyers.

But part of the equation of Gen Z’s relatively paltry share of wealth is simply because they haven’t had as much time to acquire it, Michael Walden, professor emeritus of economics at North Carolina State University, told Fortune.

“It makes logical sense that older people will accumulate greater percentages of wealth at any point in time because they’ve had more years to invest and reap the returns of their investments,” Walden said.

Beyond just more time, Gen Z will indirectly benefit from the investments made by their parents and grandparents as they await the Great Wealth Transfer that promises to distribute, by some estimations, $124 trillion in inheritance to the younger generations. Just this year, 91 heirs inherited a record $297.8 billion, according to the UBS Billionaire Ambitions Report, a 36% increase from last year.

Walden said the Great Wealth Transfer is coming, but Gen Z and millennials shouldn’t rely on the death of a loved one to begin their wealth acquisition journey in earnest.

“It’s hard to target when that’s going to come, so I would argue to any young person that I would be talking to, have a plan, be consistent with the plan,” he said.



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