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Uber Introduces $1,500 Monthly Cap On AI Coding Tools After Budget Blowout

Uber has set a $1,500 monthly cap on employee spending for specific AI coding tools after the company exhausted its entire 2026 budget for those tools in the first four months of the year.

The limits apply to agentic coding platforms such as Anthropic’s Claude Code and Cursor, according to Stocktwits. Prior to the caps, some engineers were generating monthly bills between $500 and $2,000 in token consumption as adoption of the tools surged following their rollout in late 2025.

In April, Uber CTO Praveen Neppalli Naga went on the record saying the company had burned through its entire 2026 Claude Code budget in four months. Roughly 5,000 engineers, monthly usage rates between 84 and 95%, per-engineer bills ranging from $150 to $2,000. Neppalli reportedly torched $1,200 in tokens during a two-hour internal demo. Macdonald would later describe his reaction to learning the number as a "head-exploding moment."

President and COO Andrew Macdonald has been open about the challenge - noting that while AI tools are seeing strong adoption, the direct connection between higher token spend and the delivery of useful new features for customers remains unclear.

A company spokesperson said the new framework is intended to “responsibly encourage agentic AI adoption and experimentation at scale” while keeping costs under control. The restrictions do not apply to all AI tools used at Uber - only the higher-cost agentic coding software.

A Wider Corporate Reckoning on AI Costs

Uber’s move is part of a broader shift among large companies as they confront the real costs of scaling artificial intelligence. Walmart has similarly capped employee access to its internal AI assistant, Code Puppy, after usage far exceeded expectations. The retailer shifted from unlimited tokens to fixed per-employee allocations and is now emphasizing training to ensure AI is used for high-value tasks.

This is what we've been seeing with every company we work with.

Try justifying spending 100k on token spend when only 18k even makes it to a stable prod feature.

In the rush to maximize AI token spend, companies are wasting over 44% on bug fixes https://t.co/9MNOtXtk4Z pic.twitter.com/y68Ed0XwXj

— Aiswarya Sankar (@Aiswarya_Sankar) May 26, 2026

Microsoft has also scaled back internal access to Claude Code for engineers in one of its major divisions, directing staff toward its own GitHub Copilot tools amid rising costs. But then, GitHub started charging for actual use vs. a flat monthly fee.

🦔GitHub Copilot switched to token-based billing this morning and users are already out of credits. Pro+ subscribers paying $39 a month are reporting 60% of their credits gone in two hours of normal use. One user lost 20% of their allowance from a single file review with no code… pic.twitter.com/AnIewV27rE

— Hedgie (@HedgieMarkets) June 1, 2026

Across industries, companies are discovering that agentic AI tools can deliver meaningful productivity gains but often consume tokens at rates that quickly outpace traditional budgeting models. Many organizations initially rolled out these tools with minimal guardrails. The result has been budget overruns and increased scrutiny from finance teams and boards over return on investment.

Rather than abandoning AI, most companies are responding by adding governance: usage dashboards, spending caps, approval workflows, and clearer prioritization of high-value use cases. The goal is to make AI adoption sustainable rather than uncontrolled.

As model efficiency improves and costs per token continue to decline, the economics of AI are expected to become more favorable. For now, the most disciplined organizations are treating AI spending with the same rigor applied to other major technology investments - balancing rapid experimentation with financial accountability.

Tyler Durden Wed, 06/03/2026 - 15:30

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Latest Fed Beige Book Underscores "K-Shaped" Split Of US Economy

Economic activity increased at a "slight to moderate" pace for ten of the twelve Federal Reserve Districts, while one District reported a slight decline and one reported no change, according to the latest Fed Beige Book.

The just released Beige Book - prepared at the Federal Reserve Bank of Kansas City based on information collected on or before May 27, 2026, and is the second one to capture the effect of the war on the US economy - found that consumer spending remained mixed across districts and increasingly bifurcated across income groups amid affordability pressures, the latest confirmation of the K-shaped economy.

In keeping with an increasingly fractured economy, the anecdotes highlighted moments of weakness that indicated far more weakness that the headline assessment indicated, to wit:

• higher-income households remained resilient and less sensitive to price increase, while middle-income households were described as “squeezing more life out of every dollar before deciding to spend it,” and low-income consumers showed greater financial strain. Said strain led to reports of increased credit card usage, fewer retail visits, and stronger demand for necessities.
• Auto dealers reported softer new vehicle demand tied to affordability and fuel costs, alongside substitution toward used and hybrid vehicles.
• By contrast, manufacturing activity increased at a modest to strong pace for nine of the Districts and only one noted a slight decline from the previous period.
• Banking conditions were stable across most Districts; however, residential mortgages, consumer, and agricultural loan delinquencies were noted as rising in several of the Districts.
• Agriculture conditions were unchanged or declined for most of the Districts, with cost pressures intensifying from fuel and fertilizer spikes.
• Energy activity increased in two of the markets, but Districts reported that the outlook remains highly uncertain leading producers to hold off on materially expanding activity.
• More broadly, business outlooks for the next six months were reported to have little change in anticipated growth, as elevated uncertainty and signs of weakening consumer spending weighed on sentiment.

In terms of labor markets, the Beige Book said the following: 

• Employment showed little to no change across eleven Districts, while one District experienced modest growth.
• Manufacturing hiring was the strongest sector in several Districts, supported by defense-related activity and rising data center demand.
• Wage growth generally remained modest to moderate and largely in line with inflation. That said, Districts reported more frequent wage adjustments and cost-of-living increases to manage increasing fuel and other household cost pressures.
• Most Districts described a low-hire, low-fire environment, with workers increasingly reluctant to change jobs because of economic uncertainty.
• Hiring remained selective and primarily focused on critical roles or attrition replacement.
• Professional services occupations had mixed demand conditions, partly reflecting shifts in technological and operational changes.

As for prices, they "increased at a moderate to strong pace" overall, with most Districts reporting higher inflation than the previous report.

• Districts noted that energy-related costs tied to the conflict in the Middle East were the primary driver of inflationary pressures, with spillovers into shipping, packaging, groceries, and fertilizer.
• Non-labor input costs continued to rise faster than selling prices, contributing to broader concerns about margin compression.
• The ability to pass on higher costs remained mixed across sectors, particularly among consumer-facing firms.
• Consumer uncertainty and concerns about fuel prices impacting households were noted by several Districts.
• Several regions highlighted inflation mitigation strategies of firms that ranged from supply-chain optimization, product adjustments, reduced offerings, and temporarily absorbing higher costs to preserve customer demand.

Finally, here are the main highlights by Fed districts

• Boston: Economic activity grew slightly overall. Employment was unchanged, but hiring activity picked up in places, and wages showed slight gains. Cost pressures linked to the Middle East conflict remained elevated, although output prices rose only slightly overall. Consumer spending edged higher, despite the strain on household budgets from elevated gas prices. The outlook was mixed.
• New York: Regional economic activity increased slightly after a sustained period of weakness. Manufacturing activity grew strongly, consumer spending increased moderately, and housing activity picked up. Employment edged up, and wage growth eased somewhat but remained modest. Selling price increases rose to the high end of the moderate range, and input prices rose strongly, driven by rising energy costs. Businesses generally expected modest improvement.
• Philadelphia: Business activity declined slightly in the current period, down from a slight increase in the last period. Employment declined somewhat, as manufacturers and nonmanufacturers reported declines in jobs overall. Wage inflation held steady at a modest pace, and firm price inflation was moderate. Expectations for future growth rose at a strong pace for manufacturers but remained below the long-run average for nonmanufacturers.
• Cleveland: Fourth District business activity increased moderately, with similar growth anticipated in the months ahead. Manufacturing demand rose robustly, while retailers faced dampened demand from higher fuel prices. Home sales continued to improve, and data center buildouts drove commercial construction demand. Employment increased modestly. While wage pressures remained moderate, increases in nonlabor costs and selling prices were robust.
• Richmond: The regional economy continued to grow modestly this cycle. Modest growth was reported for consumer spending, financial services, and nonfinancial business services. Manufacturing activity increased moderately amid continued concerns about economic stability. Employment was unchanged, on balance, and wage growth was modest. Price growth remained in a moderate range despite many comments about increased input costs.
• Atlanta: Economic activity grew at a modest pace. Employment levels were flat and wages rose slowly. Prices and costs rose at a moderate pace. While retail sales grew modestly, travel activity slowed. Commercial and residential real estate were flat to down. Transportation and manufacturing activity expanded modestly. Energy demand rose moderately.
• Chicago: Economic activity in the Seventh District increased slightly over the reporting period. Manufacturing demand rose moderately; consumer spending, employment, and construction and real estate activity increased slightly; business spending was flat on balance; and nonbusiness contacts saw no change in economic activity. Prices rose rapidly, wages were up modestly, and financial conditions tightened slightly. Farm income expectations for 2026 were unchanged.
• St. Louis: Economic activity has slightly increased. Employment was unchanged and wage growth remained moderate. Prices have risen at a robust pace due to widespread higher nonlabor and energy costs. The outlook has slightly deteriorated, with contacts citing ongoing uncertainty, supply chain disruptions, and rising fuel costs linked to the conflict in the Middle East.
• Minneapolis: The District expanded modestly. Prices increased sharply and input pressures were especially high. Employment grew slightly and wage growth was modest to moderate. Services, manufacturing, and construction activity grew. Oil and gas contacts reported little change in activity or plans despite oil price shocks.
• Kansas City: Economic activity in the Tenth District increased slightly, though consumer-facing firms continued to report softer demand and margin compression. Restaurants noted middle-income households have become increasingly cautious with discretionary spending. Firms also reported rising input costs, with non-energy expenses exerting the greatest upward pressure.
• Dallas: Economic activity in the Eleventh District rose modestly. Growth resumed in the service sector and picked up pace in manufacturing and banking. Retail sales weakened, energy activity ticked up, and the real estate sector was mixed. Employment was largely flat. Outlooks were tepid amid heightened uncertainty stemming from the Middle East conflict and sharply higher transportation costs.
• San Francisco: Economic activity was stable. Employment levels were unchanged on net. Prices rose moderately, and wages grew slightly. Retail sales were roughly flat. Manufacturing activity improved somewhat, while conditions in agriculture and residential real estate weakened slightly. Activity in consumer and business services, commercial real estate, and finance was steady.

Tyler Durden Wed, 06/03/2026 - 14:55

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