The Information AM

Save 25% on an annual subscription to read the most important news about technology and business first. For even more, Save $250 on The Information Pro for unlimited access to our proprietary org charts, databases and surveys.

1.	Exclusive: Thinking Machines Cofounder to Return to OpenAI By Stephanie Palazzolo and Amir Efrati Source: The Information

Lilian Weng, a researcher who cofounded AI startup Thinking Machines Lab alongside former OpenAI Chief Technology Officer Mira Murati, is rejoining OpenAI after announcing her departure from Thinking Machines earlier this week, an OpenAI spokesperson confirmed to The Information. She will be working on using AI models to develop new models, otherwise known as recursive self-improvement research, said one person with knowledge of the move.

Her exit marks the fourth Thinking Machines cofounder to leave the company in the last year. Murati and John Schulman, who previously co-founded OpenAI, are the two remaining cofounders at Thinking Machines.

In a post on X announcing her departure, Weng wrote that “the amount of consistent stress and workload have pushed me beyond what my health can sustain physically.” Thinking Machines recently released its first AI model, Inkling, which is open-source and can understand images, audio and text.

Prior to co-founding Thinking Machines, Weng spent several years at OpenAI, most recently as the vice president of research for safety. Thinking Machines has raised $2 billion in funding from investors including Nvidia and Andreessen Horowitz and was last valued at $10 billion. Last fall, the company was in talks to raise new funding at a $50 billion valuation, though it’s not clear where those fundraising talks ended up.

Weng and Thinking Machines did not immediately have comments.

2.	Meta Shares Fall as Profits Drop By Jyoti Mann Source: Meta Platforms

Meta Platforms’s operating profit fell 8% in the second quarter, despite 28% revenue growth, reflecting a sharp increase in costs relating to Meta’s AI investments and some one-time costs.

Meanwhile Meta CEO Mark Zuckerberg signalled that Meta was weighing whether to rent out excess computing capacity, noting on a conference call “we are getting a lot of offers for compute at a premium over what we paid for it.” Zuckerberg added that he believed “selling intelligence” offered higher profit margins than selling computing capacity, however, indicating he remains undecided.

The profit decline sliced Meta’s operating margin by 10 percentage points, compared with the first quarter, to 31%. Meta’s profits were also affected by legal charges and restructuring expenses. Meta shares were trading down 7% in after-hours trading.

The parent company of Facebook, Instagram and WhatsApp said total costs and expenses jumped 55% year over year to $42 billion, including $2.4 billion in charges related to legal proceedings and $1.2 billion in severance expenses tied to the company’s May workforce reduction of about 8,000 jobs.

The legal costs come as Meta faces a series of high-profile lawsuits over its handling of youth safety. In a recent court filing, the company said four states were seeking as much as $1.4 trillion in penalties over allegations that Facebook and Instagram were designed to encourage addictive use among young users and that Meta misled the public about platform safety. Meta disputed the potential penalty figure, which was submitted as part of arguments over how damages should be calculated if the states prevail.

The potential scale of the penalties could spark investor concerns that Meta’s legal liabilities may become a larger drag on earnings and cash flow over time.

Despite the higher costs, Meta posted revenue of $60.8 billion for the three months ended June 30, up 28% from a year earlier.

Meta narrowed its 2026 capital expenditure forecast to between $130 billion and $145 billion, raising the lower end of its outlook by $5 billion while keeping the upper end unchanged.

3.	OpenAI CFO Says Revenue Growth Accelerated in July By Erin Woo Source: The Information

OpenAI’s revenue growth has accelerated this month compared to the second quarter of this year, Chief Financial Officer Sarah Friar told employees on Wednesday, as the company tries to close the distance with rival Anthropic.

OpenAI in July has added more annual recurring revenue—a measure of monthly sales times 12—than the increase in that figure over the previous three months combined, according to a person familiar with Friar’s remarks.

The July increase has been driven by the launch of OpenAI’s recently launched GPT-5.6 group of models and growing use of its Codex coding tool and ChatGPT Work, the person said. OpenAI is also nearing its long-delayed goal of 1 billion weekly active users for ChatGPT, The Information reported on Tuesday.

It couldn’t be learned how much revenue OpenAI is generating now. In February, the company surpassed $25 billion in annual recurring revenue, The Information reported at the time.

CNBC earlier reported on Friar’s meeting with employees.

4.	Microsoft’s AI Sales Didn’t Boost Overall Growth But the Company Says It Won’t Burn Cash By Amir Efrati Source: The Information

Microsoft revenue rose 18% to $90 billion in the June quarter, the same growth rate it reported in the first quarter, according to its quarterly earnings report. AI-related sales growth was tempered by revenue declines in its Xbox and Windows device businesses, and overall revenue growth would decelerate by 1 to 2 percentage points in the current fiscal quarter, CFO Amy Hood said.

Still, Microsoft touted more than 30 million paid subscriptions to its Copilot AI features for Office 365 applications, up from 20 million paying users at the end of the first quarter. That paid seat figure includes subscribers who pay a monthly rate per seat, which starts at $30 per month, but not customers that pay Microsoft for such tools based on usage.

The paid seat growth could provide Microsoft with a temporary respite from questions about whether Anthropic and other AI firms are challenging its core software application business. At the same time, sales growth in the unit that includes Office 365 will decelerate 2 to 3 percentage points in the current quarter, Hood said.

Microsoft’s AI product sales dragged down profit margins, however. Microsoft’s operating margin from selling Office and other business software fell more than 2 percentage points between the March and June quarters. That was partially offset by its operating margin from cloud services, including Azure, Windows Server, and GitHub and other developer tools, which rose 1.3 percentage points in the same span.

In a rare public disclosure, the company said its Azure cloud server rental revenue surpassed $100 billion in the year that ended in June. The company typically only reports Azure on a percentage growth basis. Azure sales rose 43% in the second quarter, 3 percentage points faster than growth in the first quarter.

While that’s an impressive growth rate by most standards, it pales in comparison to Google’s results. Last week, Google reported its cloud unit revenues rose an astounding 82% to nearly $25 billion in the second quarter, meaning it is on pace to generate $100 billion annually at the moment. If the gap in revenue growth continues between the companies, Google Cloud could theoretically catch up to Azure in the coming years.

The gap between the two clouds could be a reflection of Anthropic’s much faster revenue growth compared to OpenAI so far this year. Google supplies Anthropic with lots of cloud servers while Microsoft is a primary supplier to OpenAI. (Microsoft said it recorded $24 billion in revenue related to OpenAI in the 12 months ending in June, meaning it accounted for about 7% of Microsoft’s total revenue in the period.)

Microsoft’s spending on AI data centers is taking a toll on its cash generation. The company generated $20 billion in free cash flow in the quarter, up more than $4 billion from the cash it generated in the first quarter but down 20% compared to its free cash flow in the second quarter last year. That’s still better than results from Google, which last week disclosed its first quarterly cash burn as a public company, thanks to increased capex for AI data centers. Microsoft will not burn cash over the next 12 months, despite a signifcant capex increase, CFO Amy Hood said. The company will spend $50 billion on capex in the September quarter, she said.

Microsoft shares rose 9% in after-hours trading. Microsoft shares have performed poorly this year, down more than 17% before the close of normal trading hours Wednesday, as questions loom over some of its struggling businesses and whether its AI investments are paying off fast enough.

5.	U.S. Senators Press Apple Not to Buy Chinese Memory Chips By Henry Siu Source: Bloomberg

A group of U.S. senators are urging Apple to drop any plans to buy memory chips from Chinese suppliers ChangXin Memory Technologies and Yangtze Memory Technologies, citing national security risks, Bloomberg reported.