{"id":133537,"date":"2026-08-08T06:14:29","date_gmt":"2026-08-08T06:14:29","guid":{"rendered":"https:\/\/www.europesays.com\/ai\/133537\/"},"modified":"2026-08-08T06:14:29","modified_gmt":"2026-08-08T06:14:29","slug":"after-blowing-through-ai-budget-in-a-matter-of-months-uber-cto-says-tokenmaxxing-era-is-over","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ai\/133537\/","title":{"rendered":"After blowing through AI budget in a matter of months, Uber CTO says tokenmaxxing era is over"},"content":{"rendered":"

Uber<\/a> believes it\u2019s found a solution to its AI spending problem after it blew through its budget for the technology in just the first few months of the year.<\/p>\n

In an interview<\/a> with The Information earlier this year, Uber chief technology officer Praveen Neppalli Naga admitted he went \u201cback to the drawing board\u201d on allotted spending after the rideshare giant encouraged employees to use its tools, particularly Anthropic\u2019s Claude Code, as much as possible, even devising \u201cleaderboards\u201d to rank software engineers on their usage.\u00a0\u00a0<\/p>\n

The blitz was part of a trend in \u201ctokenmaxxing,\u201d or companies incentivizing workplace AI use, only for many to back off from the practice<\/a> as they found it wasn\u2019t offering the returns on investment to justify the rapid spending. While Uber was no exception, Naga said the company has now figured out a better way to deploy AI without breaking the bank.<\/p>\n

\u201cWe\u2019re seeing some very interesting trends on AI costs,\u201d he wrote in an X post<\/a> on Wednesday. \u201cI think it\u2019s another signal that we\u2019re coming to the end of the so-called tokenmaxxing era.\u201d<\/p>\n

Uber quadrupled the number of employees who use frontier AI tools, Naga explained, which brought down the cost per token. It was able to do this by improving prompt caching, as well as adjusting its default model setting, evaluating new models for efficiency, and allowing engineers to see their AI usage and costs per hour.<\/p>\n

\u201cYou might expect costs to rise as adoption accelerates,\u201d Naga continued. \u201cWe\u2019ve seen the opposite. Not because we\u2019ve restricted access, but because we\u2019ve treated efficiency as an engineering problem rather than a budget problem.\u201d<\/p>\n

AI\u2019s rising ROI stakes<\/p>\n

The stakes are increasing for companies to deliver on their massive AI investments. Last month, Jim Reid, Deutsche Bank<\/a> Research Institute\u2019s global head of macro and thematic research, warned AI productivity gains were still years away<\/a>.\u00a0<\/p>\n

Profit margins for the Magnificent Seven swelled from 15% to 25% between the first quarters of 2023 to 2026, while the rest of the S&P 500 index saw only 10% margin growth over the same period, indicating little widespread returns on investment<\/a> in AI outside of the immediate tech sector.<\/p>\n

As of May, Uber was still trying to unlock the innovation AI promised.<\/p>\n

\u201cThat link is not there yet,\u201d Uber president and chief operating officer Andrew Macdonald said in an interview<\/a> on the Rapid Response podcast at the time. \u201cMaybe implicitly there\u2019s more that is getting shipped, but it\u2019s very hard to draw a line between one of those stats and \u2018Okay, now we\u2019re actually producing like 25% more useful consumer features.\u2019\u201d<\/p>\n

The threat of Jevons paradox<\/p>\n

Even as Uber unlocks strategies to lower the cost per token to make its AI use more sustainable, it risks falling into a trap economists have warned about: Jevons paradox<\/a>, in which spending on a resource, in this case tokens, actually increases even as its cost decreases. <\/p>\n

Named for 19th-century economist William Stanley Jevons, the phenomenon originally referred to his observation of coal consumption skyrocketing in 1865, despite the Watt steam engine making coal use more efficient.<\/p>\n

The same dynamic is playing out today with AI: According to the Silicon Data Token Expenditure Index<\/a>, the price of a single token dropped more than 90% since 2023, but large language model spending has doubled since late last year.<\/p>\n

\u201cAs tokens get cheaper, companies don\u2019t spend less but instead run more AI agents, automate more workflows, and generate more code, pushing aggregate expenditure higher even as the unit cost of intelligence collapses,\u201d Apollo<\/a> chief economist Torsten Slok wrote in a recent blog post<\/a>.<\/p>\n

A Bain & Co. brief<\/a> published in June punctuated Slok\u2019s claim. It found that token costs halved from December 2024 to 2025, but tokens consumed grew by 450% over the same period as companies upgraded AI tools.\u00a0<\/p>\n

Naga, for his part, noted a shift in company philosophy to put quality over quantity when it comes to token spending, but did not say if Uber was using more or less computing than earlier this year.<\/p>\n

\u201cThis is the future of applied AI at enterprise scale,\u201d he concluded. \u201cThe next phase, whatever we call it, will not be characterized by who spends the most tokens, but about how people use them as efficiently as possible.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Uber believes it\u2019s found a solution to its AI spending problem after it blew through its budget for…\n","protected":false},"author":2,"featured_media":133538,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[24,25,13959,8344,5885],"class_list":["post-133537","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ai","tag-ai","tag-artificial-intelligence","tag-spending","tag-tokens","tag-uber-technologies"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/133537","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=133537"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/133537\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/133538"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=133537"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=133537"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=133537"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}