Uber COO questions AI spending after burning through 2026 budget in just four months

Uber president says AI spending is getting 'harder to justify'

After reportedly exhausting its annual AI budget just four months into 2026, Uber is now questioning whether it's actually seeing meaningful returns on its investments. In an interview with Rapid Response, Uber president and chief operating officer Andrew Macdonald said the company isn't seeing a connection between rising token consumption for Claude Code and more useful features being delivered to consumers. "That link is not there yet, right? I think maybe implicitly there is more that is getting shipped, but it's very hard to draw a line between one of those stats and, 'Okay, now we're actually producing 25 percent more useful consumer features,'" said Macdonald. "I think over the coming quarters and years, maybe that will become clearer, but I think today it's hard, even if some of the underlying metrics are trending in a really astronomical direction." Uber spent $3.4 billion on research and development efforts in 2025, 9 percent more than it had spent the previous year. Earlier this month, Uber CEO Dara Khosrowshahi said the company was making up for its increasing AI investments by hiring fewer human employees. "We're going to have to start talking about token consumption and the associated cost versus headcount," said Macdonald. "So if you're not actually able to draw a direct line to how much useful features and functionality you're shipping to your users, that trade becomes harder to justify."

Uber chief warns no link yet between AI tokenmaxxing and shipping successful products -- company pumps the brakes on all-out AI spending

Uber CTO previously noted that the Claude Code budget for the entirety of 2026 had been spent by April. Uber President and COO Andrew Macdonald has warned that there is not yet a link between higher AI token usage and an increase in useful consumer features, seemingly pumping the brakes on 'AI tokenmaxxing.' Speaking on the Rapid Response Podcast (via Business Insider), Macdonald said, "That link is not there yet, right?" when it comes to using AI to ship features useful to consumers. Macdonald's headlining quote was taken from a part of the podcast where the discussion concerned Uber working to shape products with an eye on "what's better for the consumer." The conversation points to LLMs being used to try to hit the key marketing goal of addressing consumer wants and needs better than any competitor. The Uber COO noted that "We're working with pretty much all of the large model companies." However, the issue is that management isn't seeing a clear link between spending on AI services and successful products shipping. This may simply be because, so far, "there hasn't really been anything that's taken off yet." The interviewer and host, Bob Safian, highlighted the disappointment voiced by Duolingo employees and management regarding using AI in the workplace. Employees voiced concerns that AI was being pushed for the sake of it, while it introduced new workloads such as checking and reinforcing tasks. Duolingo management heard them and now understands that AI/LLMs don't fit everywhere. Uber's Macdonald nodded along and interjected that "the headline stats make your head explode" when companies discuss AI usage. But he also cautiously indicated that management should ask what productivity gains were delivered and what new products were AI-driven. So, Uber management isn't against using LLMs from the top providers, and it sounds like they will continue to do so. But there may be a reckoning for this technology if a clear link between spending on it and performance doesn't emerge. News of Uber's spending on AI/LLMs went viral last month. Uber CTO Praveen Neppalli Naga told The Information that his company had already blown through its Claude Code budget for 2026 by April. That incident likely caused a few heated discussions in the Uber boardroom. Perhaps Macdonald's interview provides a window into a philosophy change within Uber and one possible alternative to tokenmaxxing. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

AI Investment Is 'Harder to Justify' as Productivity Returns Lag, Uber COO Says

Uber does not see a link between productivity gains and its colossal AI spending commitments, according to the company's chief operating officer. Like much of the rest of the tech industry, Uber went all in on AI this past year. Company executives had employees across divisions embed AI into their workflows and reported that they were relying on AI agents for 10% of all code changes. While Uber doesn't outwardly subscribe to this practice, many tech giants have reportedly begun incentivizing more AI use among their employees with internal token use leaderboards. In March, Nvidia CEO Jensen Huang argued that if you hire a software engineer for $500,000 a year, they should be consuming "at least $250,000 worth of tokens" in that same time frame. But tokens cost money, and it's supposed to come from somewhere. Most executives have found that "somewhere" to be their own employees. Last month, Uber CTO, Praveen Neppalli Naga, told The Information that Uber had already exceeded its 2026 AI budget within the first four months of the year. Shortly after, at the company's earnings call earlier this month, executives said that Uber would be upping that AI spending even further and slowing down hiring to help pay for it. But now, Uber COO Andrew Macdonald says that those towering financial commitments are not directly correlating with real, tangible productivity gains, and it's making it tougher to justify the headcount reductions. "You talk to your senior engineering leaders, and you're saying, 'Okay, how many projects that were on the cutting room floor got moved above the line because of the productivity gains, because 25% of our code commits were via Claude Code last quarter,' that link is not there yet," Macdonald told the Rapid Response podcast over the weekend. "If you're not actually able to draw a direct line to how much useful features and functionality you're shipping to your users, that trade becomes harder to justify." Macdonald's comments echo long-held worries about the AI boom and its murky productivity returns. Companies across industries are spending staggering amounts of money to adopt AI and have it automate tasks across workflows, hoping for unbelievable returns on productivity and new highs for profit. The thinking among executives goes that because AI can work super fast and around the clock, and it doesn't have the same needs as a human employee does, then surely it must be the wiser economic decision to have agents take over workflows instead. But while AI can feel like it's free for those who are using it, Macdonald said, "somebody's paying the bill." The AI industry has promised that the bill and the sacrifices made to pay for it will be worth it, but that scenario hasn't panned out as quickly as promised. Another way the Uber executive says he's seen AI's lack of return is through the rise of commerce AI agents. As agentic AI gains ground, some experts started sounding the death knell for app providers like Uber and DoorDash, whose business models they say will be completely disrupted by agentic AI assistants that will shop on behalf of the average user. "We're working with pretty much all of the large model companies as they roll out, try to roll out commerce, and there hasn't really been anything that's taken off yet," Macdonald said. "It doesn't mean it won't happen, but a year ago at our board meeting, we were worried that by this point, a year later, we'd be totally disaggregated, because all commerce is going to be flowing through the large model codes in the form of chatbots, and that just hasn't played out yet." Uber is only one, though rather major, addition to a growing trend that's reportedly forming: even though the entire business world seems bullish on AI, its productivity returns are not following suit for everyone. If that trend continues, that has potentially disastrous consequences for the unprecedented AI infrastructure buildout this country is undertaking and the entire U.S. economy that AI spending has been propping up.

Uber burned through its entire 2026 AI budget in four months. Now its COO is questioning whether it's worth it | Fortune

Uber's business model is one of the most AI-forward in Silicon Valley. AI decides your ride price, optimizes your route, among other predictive features. But even with these advanced features, an Uber executive is sounding the alarm on the rideshare company's AI spending. In a recent interview on the Rapid Response podcast, Uber president and chief operating officer Andrew Macdonald said it's hard to draw a connection between the company's rising use of Claude Code and innovations meant to serve consumers. "That link is not there yet," he said. "Maybe implicitly there's more that is getting shipped, but it's very hard to draw a line between one of those stats and 'Okay now we're actually producing like 25% more useful consumer features.'" The comments follow reports that the firm had already burnt through its entire 2026 AI coding tools budget in just four months after incentivizing employees to adopt the technology through an internal leaderboard ranking teams by total AI tool usage. It's the latest development in a complex quandary arising in enterprise AI adoption: increasing AI use comes with higher costs, even as per-unit AI pricing falls. "If you're not actually able to draw a direct line to how [many] useful features and functionality you're shipping to your users, that trade becomes harder to justify," Macdonald said. Uber isn't the only company facing this issue. Microsoft earlier this month reportedly began canceling most of its direct Claude Code licenses, according to The Verge, instead moving engineers toward using GitHub Copilot CLI. A number of other business leaders have walked back their initial bullish AI views. Duolingo CEO Luis von Ahn last year reversed his outlook on AI, saying he doesn't see the tech replacing the tasks his employees perform. Uber didn't immediately respond to Fortune's request for comment. In an earnings call earlier this month, Uber CEO Dara Khosrowshahi said about 10% of the company's committed code is built by autonomous agents. Though he added that the firm's AI use extends beyond its software engineers. "We're seeing uptake of these tools, whether it's our legal team or marketing team or developers," he said. "We think it's creating employees with superpowers." But with more AI use comes higher costs. A recent study from research firm Gartner found that by 2030, inference on highly sophisticated AI models will cost AI firms 90% less than 2025 costs. But the research also found cheaper tokens won't translate to cheaper enterprise AI because agentic models require far more tokens per task than standard models, and because AI providers won't fully pass through lower costs to consumers. Some AI firms are shifting pricing plans to capture increased AI usage. Anthropic changed its pricing model, moving away from a flat fee to a usage-based model, meaning autonomous agents are now charged per token of compute use. In March, OpenAI CEO Sam Altman articulated the industry's broader direction during an interview. "We see a future where intelligence is a utility, like electricity or water, and people buy it from us on a meter," he said. A separate Gartner study forecasts AI agent software spending will reach nearly $207 billion in 2026, up more than 139% from the $86.4 billion spent in 2025. Uber spent 3.4% on research and development in 2025, a 9% increase from 2024. The company spent $951 million on research and development in the first quarter of 2026 alone, a nearly 17% increase from the same time a year ago. Still, Uber isn't shying away from technological innovation. Macdonald said the firm is going all in on autonomous driving, something he sees becoming the norm in under a couple decades. "I don't think my daughters who are little kids today, I don't think they will end up getting a driver's license," he said.

Uber Boss Seems Unsure About All Those Billions Spent On AI Slop

After years of telling investors and customers that AI was the future, one tech giant leader is sounding a lot less sure about all those burned billions In a recent interview, Uber president and chief operating officer Andrew Macdonald seemed unsure that it made sense for the company to continue to spend billions of dollars on AI tools, such as Claude coding, as there doesn't seem to be a "link" between the rising costs of the tech and actually getting anything useful from it. On May 22, as spotted by The Verge, Macdonald was interviewed by Rapid Response on YouTube. In the interview, the head of the massive ride-sharing and food delivery app explained that so far, there doesn't seem to be much of a direct connection between the ever-rising costs associated with AI tech and the kinds of useful features that can make people more likely to keep using and paying for your app or service. “That link is not there yet, right?" said Macdonald. "I think maybe implicitly there is more that is getting shipped, but it’s very hard to draw a line between one of those stats and, â€~Okay, now we’re actually producing 25 percent more useful consumer features.' I think over the coming quarters and years, maybe that will become clearer, but I think today it’s hard, even if some of the underlying metrics are trending in a really astronomical direction.†In April, Microsoft announced a big change to how it charged people for using GitHub Copilot, its own AI coding tool. Instead of charging a flat monthly fee, it is now going to charge users per token burn. That same month, Anthropic also changed how it charged people to use Claude, its AI coding tool and service. Like Microsoft, people and companies now have to pay based on how often and frequently they use the tool each month. This has quickly made using these AI toolsâ€"and those powered by themâ€"much, much more expensive. Like, using these tools now could cost three times or more than it did before these changes were implemented, back when tech giants were subsidizing the costs and eating billions in losses. “We’re going to have to start talking about token consumption and the associated cost versus headcount,†added Macdonald in the interview. “So if you’re not actually able to draw a direct line to how [many] useful features and functionality you’re shipping to your users, that trade becomes harder to justify.†Keep in mind that it was reported by The Information, and then confirmed by the company, that Uber spent the entirety of its AI budget for 2026 in just about four months. This was because the company didn't anticipate how many people would use it or how expensive it would be to let all of these employees have access to the tech. Uber also spent $3.4 billion on research and development of AI in 2025. In other words, the company is burning billions of dollars on AI, and the guy in charge is going on a podcast and simply shrugging and essentially saying, "I don't know if it's worth it yet." This all seems bad and likely is yet one more sign, among many, that the AI bubble is going to pop in the not-too-distant future. And when it does, a lot of very rich men who are supposedly very smart are going to look really, really dumb. And, folks, I can't wait.