Good morning. This summer there's been a definite shift in tone in the way corporate technology leaders talk about AI, marked by a rising focus on cost and value.

Gone are the days when the primary goal was getting workers and customers to adopt the AI features they built. Now they want to see the money. They're spending less time merely testing and learning and more time evaluating costs and zeroing in on the highest value use cases.

I recently sat down with Jill Pavlovich, senior vice president of digital shopping experiences at Albertsons about how she's seeing the shift play out internally.

"I do think there is a 'sharpening of the pencil' a little bit on. We're starting to know what works. We're starting to understand exactly where customers want to engage, so we can take a more pointed approach in where we believe that investment will pay off in the biggest way," she told me.

The stakes for making it work are high. In July, Albertsons said it expected sales to fall this year after its core grocery business struggled in the most recent quarter due to a more cautious consumer. The company said it was aiming to improve value and customer experience to bring back the more cautious shoppers. And better AI-powered experiences will be a critical part of that effort.

Pavlovich said that over the past 18 months, Albertsons has rolled out a number of AI experiences such as Ask AI, Plan AI and Buy AI that help customers with different aspects of shopping.

Now, it's consolidating. "We're bringing all those disparate AI-power moments for the customer into one really elegant single threaded conversational assistant," she said. It will help customers locate products, guide them to related products and offer advice on preparing shopping lists for big events.

The point of the consolidation is to create a better customer experience as well as a more favorable financial return on investment, she said. Trying to have separate point solutions for various parts of the shopping process meant that sometimes various teams were spending money and resources on duplicative things, according to Pavlovich.

When ROI Comes From Taco Night

I also asked Pavlovich whether the company was seeing any real returns on the AI-powered online shopping experiences so far. Were they generating enough revenue to justify the expense or were they just fun gimmicks for customers to play around with?

She said that the ROI for these assistants didn't materialize on day one, although that's typical with most new technology experiences. But Albertsons did find that shoppers who were using the tools were actually making purchases with higher average order values almost immediately. Once adoption increased enough, those slight increases per average order added up and became enough to justify the costs of building and maintaining the AI tools, she said.

"We see anywhere from a 10% lift in average order value when they use standard conversational searching and about a 26% lift in average order value when they use more comprehensive assistants to find their recipes, find the ingredients that match their dietary preferences," she said.

"When they're using a more comprehensive experience, they're adding even more [items to their basket] because they're not forgetting items," she said. For example, it might direct a shopper planning a taco night to all the ingredients, from tortillas to cheese to vegetables, which they might otherwise leave behind.

"So all of a sudden they're shopping across categories across items, not spearfishing for that single item that they need one by one," she said.

Tracking the Small Wins

Pavlovich said she works closely with a dedicated finance team at Albertsons whose job is to track spending and returns across the company's four transformation pillars: the four areas where it's making a big bet on AI to strengthen its business. They include digital customer experience, which Pavlovich oversees, as well as merchandising intelligence, empowering the staff and optimizing the supply chain.

Pavlovich said there's a check-in with that dedicated finance team every quarter to talk about AI spending relative to the value it's creating. "It's a pretty rigorous connection. The finance team is "very close to the process," she said.

Pavlovich said the AI effort has yielded some successes and valuable lessons, but that the ROI conversation still faces many unanswered questions that Albertsons, as well as other companies, is tackling.

So, no AI hasn't totally revolutionized Albertsons' bottom or top lines quite yet. But it has certainly helped the company drive some measurable smaller financial wins.

The Data Center Divide

The boom. U.S. manufacturing is booming thanks to AI data centers, and industrial companies such as Caterpillar, Eaton and Ford Motor are pivoting their business to seize the moment, The Wall Street Journal reports. Manufacturing last month rose to its highest level since 2022, when the recovery from the Covid-19 pandemic fueled a factory-production frenzy. Power-hungry data-center developers have turned Caterpillar's once-prosaic business of electricity generators into the equipment maker's leading source of profit. The company is investing $725 million to expand generator production at an Indiana plant and it converted another plant in Kansas to produce turbine engines popular with data centers.

The backlash. Delsia Bare and her mother, Ida Huddleston, rejected a $26.48 million offer for their Kentucky farmland from a company that wanted to build an AI data center. At first the women agreed to the offer from an unknown company. Then they discovered what their farmland -- the farmland that their family had cultivated for nearly 200 years -- would be used for: a 2.2-gigawatt hyperscale data center. That information turned their answer into an easy one. "Kick rocks and don't come back," Bare told the representative, after successfully revoking the agreements. Bare and Huddleston, two self-described "country hicks," have become polarizing heroes of the rural campaign against the AI technology rewiring geopolitics, the economy -- and now hometowns like theirs. Read the full story from the Journal's Erich Schwartzel here.

On Our Radar

   -- Nine top tech companies had some $3 trillion of off-balance-sheet 
      commitments mostly related to AI, according to a Wall Street Journal 
      analysis of footnotes in their most recent securities filings. Massive 
      spending commitments for data-center leases and chips aren't shown on 
      companies' balance sheets, the Journal says. Those obligations are 
      growing faster than traditional "capex," which totaled about $600 billion 
      over the past year they reported, and were about triple what the 
      companies owe under their outstanding leases and long-term borrowings. 
 
   -- Payments processing firm Stripe has finalized an agreement to acquire 
      OpenRouter, a startup that helps companies switch between AI models, for 
      more than $7 billion, Bloomberg reports, citing people familiar with the 
      matter. 
 
   -- Patients, families and healthcare professionals are turning to AI tools 
      to help identify rare and hard-to-diagnose diseases, The Wall Street 
      Journal reports. A study published in a JAMA journal found that two AI 
      chatbots suggested the correct rare-disease diagnoses more often than 
      doctors did. Doctors and researchers caution, however, that AI tools 
      still make mistakes and are limited by a lack of digitized data for rare 
      conditions. 
 
   -- AI video-generation startup Higgsfield has raised $400 million at a $5.4 
      billion valuation from investors including DST Global, Goldman Sachs, 
      Liberty Global and Intel, the Financial Times reports. The platform, 
      which launched in 2025, plans to use the funds in part to focus on the 
      enterprise, including targeting more corporate marketing departments. 
 
   -- The spectacular implosions of big book deals over suspected AI use are 
      forcing a reckoning over the nature of authorship, the relationship 
      between writers and publishers and the industry's long-term survival, The 
      Wall Street Journal says. 

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About Us

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.

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