What's up: A grim outlook for tech jobs, a game-changer for AI in China, older software firms' AI pivot. 

Good morning. Chief executives are bullish on the broad economic impact of artificial intelligence, but do expect it to weaken the job market, according to a new survey.

Despite investor concerns that AI spending is becoming overdone, 85% of chief executives believe the technology is entering a healthy growth phase rather than a bubble, according to research from global marketing network Stagwell. The study included 100 CEOs of U.S.-based companies with 10,000 or more employees.

“What I saw in this poll…is unbridled enthusiasm for AI,” said Stagwell Chairman and Chief Executive Mark Penn, a former Microsoft chief strategist and presidential pollster and strategist. Ninety-five percent of CEO respondents said AI would be transformative, while 5% viewed it as overhyped.

“What do they think is going to happen with AI? They think it is going to add to productivity, help the economy, improve the global economy, improve competitiveness, but it will weaken the employment market,” Penn said Tuesday at The Wall Street Journal CEO Council Summit in Washington.

Given the looming impact on the jobs market, it probably isn’t surprising that the broader population has more anxiety about AI than CEOs. For now, the public is more concerned about inflation than the job market, according to Penn. But over the long run, consumer sensitivities could have an impact on CEOs and their companies.

“AI promises growth and potential efficiencies. But at what cost will it have on the labor market? And will CEOs like or dislike that cost and what will it do to demand? Those are a lot of questions I think they are not ready to answer,” Penn said.

National Economic Council director Kevin Hassett, the leading candidate to be the next Federal Reserve chairman, struck a hopeful tone on AI’s potential impact on jobs.

“I don’t anticipate mass job losses,” Hassett said during the CEO summit. “Of course technological change can be uncertain and unsettling. But…the history of it is that electricity turned out to be a good thing. The internal combustion engine turned out to be a good thing. The computer turned out to be a good thing and I think AI will as well.”

Speaking of the job market, it isn't so hot for IT pros right now.

The job market for IT professionals isn’t growing—in fact, it’s shrinking, according to analysis of Department of Labor data from consulting firm Janco Associates. The unemployment rate for IT workers is 7%, Janco found, compared to the national unemployment rate of 4.4%.

The numbers point to a continuing, and troubling trend for tech workers, who have been forced to reckon with a weaker job market after the pandemic-era’s hiring spree.

There were 203,000 job openings for IT professionals in September, and just 173,000 in October, according to Victor Janulaitis, Janco’s CEO. At the same time, companies hired 94,000 workers in September, and 95,000 in October. Those numbers indicate “companies pulled back on the number of IT pros they were hiring,” Janualitis wrote in a Tuesday research note.

Janualitis also pointed to the skills gap for tech workers who have AI expertise, and those who don’t. Most new job openings are for AI practitioners and those with large language model experience, and “many existing IT professionals do not have the skills,” he wrote.

Meanwhile, some CIOs have told the WSJ Leadership Institute that they’re scaling back hiring to double-down on critical projects. “My current focus is ensuring success for initiatives we have already in-flight. That means limited hiring, as needed, for those efforts,” said Keith Golden, CIO of global professional services firm RGP.

– Belle Lin

With one unorthodox deal, President Trump instantly reshaped the U.S.-China technological Cold War. The fear among his critics: He just helped Beijing catch up.

By letting Nvidia sell its H200 artificial-intelligence chips to China, he gave the U.S. company the giant market it demanded. But he also handed China’s AI industry what it couldn’t build itself: the high-end semiconductors needed to rival America. The chips sold to China will undergo a special security review in the U.S. before they are exported, according to administration officials.

Released in early 2024, the H200 is roughly one generation older than Nvidia’s newer Blackwell chips, but to some national-security hawks, that is still too powerful for China.

China’s most famous AI export has already shown that it can close that gap with second-rate hardware. In January, DeepSeek triggered a $1 trillion stock market rout with a chatbot rivaling America’s best. It said it had trained one of its models with only 2,048 of Nvidia’s previous China-specific chips, which had been throttled to satisfy U.S. restrictions.

Many CIOs and CTOs tell us they’re well accustomed to using DeepSeek, in addition to other leading AI models. What do you think of DeepSeek or China’s broader AI efforts? Email us and let us know!

The artificial-intelligence transition is eroding profitability for some private software companies, but WSJ Pro Venture Capital’s Yuliya Chernova argues that could be worthwhile in some cases.

Software companies have been busy altering their products and sales approach now that an “AI story” is needed for any venture-backed company to raise new capital and sell its products.

In some cases, that meant reversing the drive to profitability for now and likely delaying potential initial public offering plans. Chernova cites the example of Ev Kontsevoy, co-founder and chief executive of Teleport.

The company provides identity services to secure computing infrastructure. A year ago, he was guiding it toward being cash flow positive. Now, he is expecting to increase Teleport’s burn rate by tripling his engineering team next year to design new AI-related features.

Kontsevoy said the company’s efficiency metrics will decrease during this period, but the investment is worth it because customers are ready to use Teleport’s products once they are released.

“We decided to go on the offensive. It’s a once-in-a-lifetime opportunity,” Kontsevoy said.

Cybersecurity remains top of mind for most tech leaders, fueling big fundraises for startups in the area.

Identity and access management startup startup Saviynt  this week announced it raised $700 million in an outsize Series B funding round. The tech acts as a front-door security guard for businesses by verifying the identity of workers trying to log in to companywide systems as well as specific business apps and data they are cleared to access. The latest funding sent the startup’s market valuation to about $3 billion, reflecting a heated market for internal safeguards as companies race to automate business processes.

Looking for other ways to keep your company secure? Maybe let employees spend more time on their phones.

A recent study found that people may be less vulnerable to phishing scams when using mobile phones. It turns out that generally people are more risk-avoidant when using their phones, and tend to avoid clicking on links altogether.

The debate over pre-emption of state laws marks a major flashpoint in GOP politics. Silicon Valley’s effort to woo over Trump is stoking tension that could shape the party’s approach to AI in the midterm elections, the WSJ reports.

Silicon Valley is racing to make critical minerals and blunt China’s dominance. Startups and venture capital are joining the nationwide push to develop new sources of metals the U.S. desperately needs, the WSJ reports.

Social media ban imposes brave new world on Australian teens. Australia has implemented a new law requiring 10 popular social-media platforms to ban users under 16 years old, effective Wednesday, the WSJ reports.

This February 10–11, technology leaders will gather in Palo Alto 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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