What's up: Three questions for BofA's tech chief; Meta restructures AI teams; AI concens rile markets; Is American capitalism in retreat?

Good morning. After the billions poured into backing artificial intelligence efforts–from data center builds to payrolls for 20-something AI wunderkinds–it can sound almost sacrilegious to voice caution around AI spending.

But here’s Bank of America’s newly appointed Chief Technology and Information Officer Hari Gopalkrishnan telling WSJ Leadership Institute’s Isabelle Bousquette that he aims not to overspend or overengineer with unnecessary features.

“This isn’t cheap stuff. You’re using GPUs that are not commodity,” he said, referring to Nvidia’s pricey AI chips. “You’re using money and resources in the cloud that are not cheap,” he said.

To be sure, Gopalkrishnan can tap the bank’s $13 billion tech budget for 2025, with $4 billion set aside for developing new technologies like AI. But the point remains that when it comes to AI, as with any technology, he is trying to build prudently. “It’s very easy to let the hype get away from you,” he said.

Below, Gopalkrishnan recaps an episode involving the bank’s popular Erica AI chatbot where he did not let hype stand in the way of delivering the right user experience.

As it turned out, customers did not want to talk out loud to their banking app about money issues.

Gopalkrishnan sat down with the Wall Street Journal Leadership Institute’s Isabelle Bousquette to talk about how to track this feedback early on and why it’s important to pivot early.

WSJLI: What was your thinking with the initial voice integration into Erica?

Gopalkrishnan: When we first built Erica, we thought: hey, voice is going to be just as important as text. People are going to speak into the machine as much as they will type and text into it. We realized pretty quickly that 90% of the people were just typing into it. And it kind of makes sense because people probably aren't comfortable yelling out like, ‘hey, how much is my balance?’ So why overengineer that? Let's worry about the next set of integrations we can do.

WSJLI: What do you mean by overengineering it?  

Gopalkrishnan: You'd be amazed how much time we were spending thinking about how we should process voice. We were like, whose voice should it be? And how do you tune for voice? Should someone stop speaking and should we detect pauses in their speech before we start processing it? Should we have them press a button to say I have stopped speaking?

So we stopped focusing as much of our efforts on trying to make the voice experience that much better because people just weren't using it.

WSJLI: How did you catch onto that so early on? What’s your process for rollouts and feedback?

Gopalkrishnan: We build it, then we would first roll it out to our associates, and we would get feedback from them. Then we would do a launch in a single state. And we would pick a small state because we want to minimize the blast radius. And we would look at feedback from the first state. Then we'd say, let's launch to the next five states.

What happens each step of the way is we're processing feedback. In this case, actually, interestingly enough, it was after the second state rollout, I believe.

No one told us they didn't like voice. We looked at the usage and said: you know what, people just aren't using voice (because we can measure all that). Let's not overinvest here. People were still happy and we could focus our attention on other things.

A drop in megacap technology stocks pushed major indexes into the red Tuesday. The eight companies valued at more than $1 trillion lost a combined $385 billion in market capitalization. Palantir, which trades at more than 200 times projected earnings, led S&P 500 decliners with a 9.4% drop. Oracle dropped 5.8%.

Amid the declines, the FT detects rising concerns with the state of the AI boom, pointing to remarks by OpenAI CEO Sam Altman last week about the possibility of an AI bubble.

Closer to home and more concerning was the release this week of a Massachusetts Institute of Technology report finding that the vast majority of AI pilot programs launched to drive revenue growth fall flat, according to Fortune. 

One trader tells the FT that the report "is spooking people."