Good morning. The ongoing debate over the nature of AI investment has shifted. Early this year, the burning question was whether AI was a bubble, and that morphed into, well of course it’s a bubble, when will it pop? Those questions haven’t exactly gone away, but a round of power moves from Google and now AWS has shifted the focus to AI’s competitive dynamic.

How did we get here? It began with positive impressions of Google’s new Gemini 3 model and gained momentum with news that Meta Platforms is in talks to use AI chips made by Google, potentially reducing reliance on Nvidia.

On Tuesday Amazon Web Services unveiled a host of new AI tools and features designed to help companies nab more value from generative AI, including agents that can carry out tasks for hours or days without getting stuck and asking users for help. AWS also shared news on Nova Forge, which lets companies train private instances of Amazon’s Nova models on their proprietary data, and the general availability of its Trainium3 AI chip. The WSJ Leadership Institute’s Isabelle Bousquette has the full story. And be sure to read her Q and A with AWS Chief Executive Matt Garman below for insights into the future of work.

These innovations raise questions about how secure Nvidia’s margins are, and whether OpenAI can meet the competitive moment. It also underscores that the tech giants see plenty of good reasons to invest capital in developing AI models and chips, given strong demand from consumers and businesses.

So is it a bubble and will it pop? It would be presumptuous to try and predict the future, especially in a market as volatile as AI. But for now at least, AI is characterized by a new round of innovation and rising competition.

WSJLI: How is AI changing AWS’s workforce?

Garman: If we think about software development as an example we're starting to see teams who think a little bit less about writing code and more about directing agents to deliver the outcomes that they need.  We're seeing this mental shift, and we're having to re-teach technology teams how to organize and think about this.

WSJLI: What roles do you need less of versus more?

Garman: It's not that you need more or less, I actually think you're seeing roles kind of merge and combine.

There's actually like a blending of a software developer, a program manager, and a product manager–and maybe even a development manager–together in one role. And so you actually need somewhat smaller teams that can do more.

You don't necessarily need a team of 20 that maybe has two program managers and a product manager and a couple of dev leads and whatever. You actually can have a smaller team of six or eight software developers that can do those same tasks.

And that is true across the organization. That's true of marketing, it's true of legal teams. And frankly, you know, I think most employees that I've talked to like that. They have a broader scope.

WSJLI: But are they also worried about losing their jobs?

Garman: Not for the ones that are able to be flexible and are willing to change. I think that if you have employees that want their job to be exactly the same as it was 30 years ago, and are not willing to change and aren’t willing to learn new tools and capabilities they're going to struggle.

WJSLI: Amazon is doing layoffs across the board. Is that because of AI efficiencies or for other reasons?

Garman: That was for other reasons. That was not for AI efficiencies. We have more than enough work and ideas of things that we want to go build and invent for our customers. So it's not for that.

That was more on a cultural level, we've been on this journey for the last three years to flatten our organization, get customers closer, get our employees closer to customers, and allow us to move faster. And so some of that requires reshaping your organization. And so it's really much more of those goals in mind around culture and being able to move fast as opposed to AI replacing any sort of work.

WSJLI: With the in-office work mandate, I imagine you've lost both employees and potential candidates.  Looking back, was it worth it?

Garman: Oh, no question. I think it's been a home run for us. There was definitely some set of talented people that we lost. But the gains that we've had are super important, both for how we want to operate as a company and how we want to invent for customers. You'd be hard pressed to go find a startup with 10 people where they all work remote, and they're trying to innovate on new ideas. There's no way that we would be iterating at the pace we are today if we hadn't made that change.

From AWS’s new Trainium3 to startups redesigning the chip-design process, the industry is being reshaped by AI’s accelerating demands.

Amazon Web Services on Tuesday announced the public launch of its Trainium3 custom AI chip, which it says is four times as fast as its previous generation of AI chips. The company said the chip, produced by AWS’s Annapurna Labs custom-chip design business, can reduce the cost of training and operating AI models by up to 50% compared with systems that use equivalent graphics processing units, or GPUs.

Count Palo Alto-based Ricursive Intelligence among the startups looking to remake the chip industry. The company, which makes software to automate the entire chip-design process, raised $35 million with funding from Sequoia Capital. The company, now valued at $750 million, expects to release its first product next year, WSJ reports.

HP Inc. warned that rising memory-chip prices are pressuring earnings, Barron's reports. The company cut its fiscal-year outlook, citing a hit from higher memory costs, despite strong quarterly results boosted by AI PCs and Windows 11 upgrades. HP also announced that it was cutting 4,000 to 6,000 jobs.

The training wheels are off. Long known for yielding at every stop sign and deferring to other cars and pedestrians, Waymo's robotaxis are now bending rules, asserting themselves in traffic, and prioritizing efficiency over courtesy.

Chris Ludwick, a senior director of product management with Waymo, tells the WSJ that its part of making its cars “confidently assertive,” adding, "that was really necessary for us to actually scale this up in San Francisco, especially because of how busy it gets.”

Anthropic could be in the early stages of preparing for an IPO. The FT reports that the AI startup has engaged Wilson Sonsini Goodrich & Rosati, a law firm which has worked with Google and LinkedIn in taking them public.

The EU’s top court ruled that Apple can face antitrust lawsuits in the Netherlands over its App Store terms, WSJ reports. Two Dutch consumer foundations claim Apple abuses its dominant position by charging unfair developer fees that ultimately harm users. Apple had argued Dutch courts lacked jurisdiction, but judges rejected that, noting Apple operates a Dutch-specific App Store.

This February 10–11, technology leaders will gather in Palo Alto, Calif. for The WSJ Technology Council Summit to explore the realities of enterprise AI, the evolving role of tech leadership and the urgency behind building meaningful, business-driving AI strategies. Join the Technology Council and be part of the conversations shaping the future of corporate innovation.

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