The Morning Download: Companies Race to Limit AI Token Costs

Good morning. As the economics of artificial intelligence lead to rising costs across the economy, big companies are working to maintain control over spending. The unit price of AI, measured in tokens, is falling, but companies are using so many more tokens that absolute costs can still rise, triggering long-established corporate instincts for reining in the spending. The WSJ Leadership Institute’s Belle Lin has the story.

“AI costs are climbing, though most tech leaders remain convinced it can eventually deliver real returns—just not at any price,” she writes.

Chief information officers told The Wall Street Journal Leadership Institute they are deploying a number of strategies, including tried-and-true techniques sharpened during the rise of cloud computing—and the need to manage ballooning cloud costs—to keep their AI costs under control.

At Priceline, dashboards track token usage, with monthly reports delivered to the chief financial officer and chief technology officer, said Chris Reed, a senior director of IT finance at the online travel company. High token usage “prompts a conversation” with the employee to figure out how they’ve been using AI—and limits can be malleable if they’re working on a revenue-generating initiative, Reed said.

Agents of budgetary change. “It will be orders of magnitude higher than what we spend today,” said Greg Meyers, chief digital and technology officer of Bristol-Myers Squibb, adding that he expects “exponential” costs associated with AI agents as AI usage hits an inflection point.

Meyers said he has already prepared the biopharmaceutical company’s management team, including its CFO and board, to expect “pretty high token consumption.”

But it isn’t all bad news: “If you factor in what we believe is the payoff here, we believe that it’s actually a pretty positive [return on investment],” he said. Tech leaders have faced similar cost pressures in the past, especially with the rise of cloud computing.

While cloud was often sold as a mechanism for lowering costs, any advantage could evaporate if users forgot to turn it off when they were finished, a mistake akin to leaving the kitchen sink running too long.

Principal Financial Group is managing the cost of scaling AI by drawing on governance and optimization practices in place, similar to what companies have done with cloud, said Kathy Kay, CIO.  For instance, it is focused on matching the right AI model for the right task, instead of always reverting to the most expensive options, so that “higher usage doesn’t necessarily translate into higher costs.”

Tech leader takeaway. Companies need to hone their control over the AI budget now, because token usage is bound to keep growing. Asking an AI agent to complete a task can require 50 times as much computing power as it needs to answer a question, according to Jim Schneider, a senior equity research analyst at Goldman Sachs. Goldman predicts that AI agents will increase AI token consumption by 24 times over the next four years, and business AI agents will increase token consumption by 55 times by 2040.

How are you managing the AI budget so that costs don’t overwhelm a potential return on investment? Let us know.

Is an AI jobs apocalypse coming? Amid efforts to anticipate AI's effect on employment, observers are putting forward a volatile mixture of optimism and anxiety.

Here's a bit of good news: New research covering nearly 22,000 U.S. companies found that firms investing most heavily in generative AI grew their white-collar workforce by 10.2%, challenging predictions of broad AI-driven job losses, the FT reports.

The caveat: Almost all the gains were concentrated in the tech sector among smaller, fast-growing companies.

WSJ: Let’s put specific numbers on this. We’re chatting at a moment when the U.S. jobless rate is 4.4%. How much do you think AI will send that rate higher or lower in 10 years?

David Autor, professor at the Massachusetts Institute of Technology: If we handle this transition well, the unemployment rate won’t rise substantially, though it’s possible the share of people who choose to work will fall. They won’t show up in unemployment, but they will show up in our further fractured politics.

Martha Gimbel, director of Yale University’s Budget Lab: So much of this depends on how quickly technological disruption happens and how quickly new jobs emerge. In general, I think this conversation underrates macroeconomic factors that could drive up the unemployment rate.

Anton Korinek of the University of Virginia: Given the rapid pace of advances in AI, I feel a lot of uncertainty even about where the labor market will be in 12 or 24 months. In 10 years from now, our world may be transformed by artificial general intelligence. Employment or unemployment could be anywhere.

• Data centers’ demand for electricity is driving up power costs for steel companies by tens of millions of dollars a year and threatening the companies’ operations, according to a new industry report reviewed by the WSJ. Executives warn that the risk of sporadic production outages could intensify if power shortages force utilities to prioritize data centers.

• Taiwanese prosecutors have escalated a probe into the alleged smuggling of Super Micro AI servers equipped with Nvidia chips to China, raiding companies including a Super Micro distributor, WSJ reports. 

• The New York Times reports that U.S. political campaigns across both parties are rapidly embedding AI into nearly every operation, from analyzing voter data gathered door-to-door to drafting messages and conducting opposition research. According to one survey, 87% of campaigners said they now use AI daily as part of their work.

• Citing the rapid advance of AI hacking tools, Apple tells Reuters it plans to release security updates ahead of its broader iOS rollouts, a break from its practice of bundling fixes with major releases.

This September 14–15, technology leaders will gather in New York City for the WSJ Technology Council Summit to explore how enterprise AI is moving from experimentation to measurable business value. Join the Technology Council and be part of the conversations shaping the future of leadership, as executives tackle AI deployment, cybersecurity, evolving technology policy, enterprise transformation and the strategies driving the next generation of business innovation.

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Follow Isabelle Bousquette on LinkedIn, Instagram, X, and TikTok for more behind the scenes on her tech and AI coverage, and lately, her contributions to the WSJ Leadership Institute's new Executive Resilience series, where she's profiling America's top execs about their fitness and wellness habits.

Follow Belle Lin on LinkedIn and X for her latest reporting on enterprise technology and AI.

Steven Rosenbush is chief of the enterprise technology bureau at the WSJ Leadership Institute. He also has a column. You can follow him on LinkedIn.

Tom Loftus is the editor of The Morning Download. He suggests following Isabelle, Belle and Steve on their various social channels. But if you insist, here's his LinkedIn.