Good morning. “You can either watch this thing, embrace this thing, or get run over by it.” That was the advice Cisco CEO Chuck Robbins offered to business leaders about AI on Tuesday, during a special “AI Summit” that the company hosted in San Francisco.
If the market is any indication, investors don’t seem to think businesses are heeding Robbins’ advice. Tech companies, particularly software companies, got battered Tuesday on fears that AI is set to make traditional software products unnecessary. Why pay for Salesforce (whose stock fell 6.8%), or Adobe (down 7.3%), the thinking goes, when you can simply vibe code your own versions of their products with AI? Then again, lots of AI-centric companies got swept into the selloff too, including Figma (down 10.9%) and Microsoft (down 2.9%).
One company that defied the trend was Cisco, whose stock finished the day up 3%. Apparently, Wall Street decided to spare the messenger.
Today’s news below.
Alexei Oreskovic
@lexnfx
alexei.oreskovic@fortune.com
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New CEOs at Disney, HP, and PayPal
Change is in the air for CEOs.
The Walt Disney Co. appointed Josh D’Amaro as its next chief executive officer on Tuesday, succeeding two-time CEO Bob Iger. D’Amaro, who will get a $45 million pay package, comes from the company's theme parks and experiences division, which generates the lion's share of the company's profits.
D’Amaro beat out Dana Walden, Disney's entertainment division co-chair, for the top job in a closely watched succession process. It was all carefully managed by Disney after its messy changeover in 2020, when Bob Iger handed the reins to Bob Chapek only to reclaim his job two years later.
Things were not quite so smooth up in Silicon Valley on Tuesday, as PayPal dumped CEO Alex Chriss with a pointed and public farewell note ("the pace of change and execution was not in line with the board’s expectations") and replaced him with Enrique Lores, the CEO of HP.
Lores' move to PayPal seems to have caught HP by complete surprise, according to a report by Semafor. HP named board member Bruce Broussard, a former CEO of Humana, as its interim leader.
While we're on the subject of CEO changes, don't miss Phil Wahba's insightful piece about why AI is likely to bring about even more changes in the C-suite—AO
Elon Musk's X Faces More Regulatory Heat in Europe
Grok, xAI’s chatbot, continues to land Elon Musk’s social media company in hot water. French authorities raided X's Paris offices on Tuesday as part of a sprawling investigation into suspected offenses including complicity in possession and distribution of child abuse images and creation of non-consensual sexual deepfakes. Prosecutors also announced they had summoned both Musk and former X CEO Linda Yaccarino for voluntary questioning in April.
The probe, which was first launched in January 2025 after a complaint about biased algorithms, has since widened to include charges related to Grok—including whether Grok engaged in Holocaust denial via its outputs, a crime in France. Additional potential charges include fraudulent operation of data processing systems and running an illegal online platform.
Across the Channel, the U.K.'s Information Commissioner's Office also launched a new probe into Grok that will investigate reports that the chatbot has been used to generate sexual imagery of children. The European Commission, meanwhile, is investigating X over the alleged creation of AI-generated intimate images without consent. X previously dismissed the French probe as "politically-motivated" and an assault on free speech. —Beatrice Nolan
AWS boss emphasizes barriers to space data centers
Amazon has more than 900 data centers spread across the planet. And if you ask Matt Garman, the CEO of Amazon Web Services, that is exactly where they’ll stay for the foreseeable future.
Speaking at the Cisco AI Summit Tuesday, Garman threw some cold water on the notion of space-based data centers, which have been touted by Elon Musk and others as the future of AI.
While putting AI data centers in space has obvious benefits, including the ability to harness energy directly from the sun and "easy cooling," Garman said there are also some big obstacles to putting data centers in space or on other planets. Chief among them is the cost of transporting equipment.
“I don’t know if you’ve seen a rack of servers lately: They’re heavy,” Garman said in an interview at the Cisco AI Summit in answer to a question about the viability of space-based data centers. “And last I checked, humanity has yet to build a permanent structure in space. So … maybe.”
The comments come one day after Musk announced the merger of SpaceX, his rocket company, with his AI company, xAI, in a deal that reportedly values the combined companies at a staggering $1.25 billion. —AO
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