PayPal is looking toward the future, despite its falling stock and looming layoffs. In its first-quarter earnings call, CEO Enrique Lores told investors that PayPal needs to “recommit to the fundamentals,” which included “becoming a technology company again.”

There was no need to read between the lines — PayPal was pitching an AI-powered turnaround.

Lores explicitly said so, telling analysts on this week’s call that leading companies find ways to differentiate themselves by innovating and that now is the time for PayPal to take action. This includes modernizing its tech platform, moving faster to become “cloud-native,” and “aggressively adopting AI in our development processes,” Lores said. The latter would increase developer productivity and shorten time to market, he added.

It’s a startling admission from PayPal that it has yet to fully embrace AI in-house, when AI-assisted coding is one of the breakout areas where the technology has truly excelled.

Other consumer tech companies have rapidly adopted AI in recent months to assist with coding, with Spotify even declaring in February that its top developers haven’t written a line of code since December. Meanwhile, top dev teams are trying to outcompete one another by tokenmaxxing — a proxy for understanding who at the company is experimenting with AI more often, based on the number of AI tokens they use.

PayPal is only now catching up, it seems.

Lores said the company has formed a new “AI transformation and simplification” team to help with its enterprise AI agenda. Combined with the planned layoffs, which Lores characterized as PayPal removing layers from its organizational structure, the addition of AI-enabled processes is expected to bring the company at least $1.5 billion in cost savings over the next two to three years, he said.

The company announced last week it was reorganizing its business, which streamlines the operation into three segments: checkout solutions and PayPal, consumer financial services (and Venmo), and payment services and crypto. In addition, Bloomberg reported on Tuesday that PayPal plans to cut around 20% of its workforce over the next two to three years as part of its cost-savings plan, equating to north of 4,500 jobs.

More cost savings will come from PayPal’s plans for AI adoption, company execs said on the call. That includes bringing AI into areas beyond coding, like customer service, support operations, and risk management, to name a few.

“I think the changes that AI will enable us to do are … going to be very significant,” said Lores. “This is why we created a group last week, reporting to me, that is going to be in charge of driving — function by function, process by process — this AI transformation. And this is not about adopting AI as a technology, where we have done many pilots in the company, and we have seen what is possible. It’s really about understanding how can we redesign the key processes … this is what we have seen that really will drive significant savings.”

Announcing an AI-driven push to cut costs while eliminating thousands of jobs underscores a core criticism of the technology — it comes with a human cost.

It’s worth noting that, in this case, PayPal was already in need of restructuring. The company may have beat on its first-quarter earnings with revenue of $8.4 billion, up 7% year-over-year, but it forecast weak guidance for the second quarter, sending the stock tumbling after earnings. That follows a long post-pandemic decline that has sent the stock down over 80% from its 2021 high and has stunted PayPal’s growth.

Asked if separating Venmo into its own business meant the company would be open to selling it, Lores said that, for now, this is what made the most sense in terms of the turnaround plan. Still, he signaled openness to future deals by saying “my number one priority is to maximize shareholder value,” in answer to an analyst’s question about a sale.

On Tuesday, OpenAI released a new foundation model called GPT-5.5 Instant, which will replace GPT-5.3 Instant as the default ChatGPT model. The company said the model reduces hallucination in sensitive areas such as law, medicine, and finance, while maintaining the low latency of its predecessor.

OpenAI released the latest GPT-5.5 model last month with the company claiming improvements in areas like coding and knowledge work.

The new model also achieved a score of 81.2 in the AIME 2025 math test, compared to 65.4 for the older model. It also outperformed its predecessor on the MMMU-Pro multimodal reasoning benchmark, with a score of 76 vs. 69.2.

The release placed a particular emphasis on context management. GPT-5.5 Instant can use its search tool to refer back to past conversations, files, and Gmail to give you more personalized answers. This feature will be available to Plus and Pro users on the web, with plans to roll it out to mobile soon. OpenAI said that it plans to extend access to this feature to Free, Go Business, and enterprise users in the coming weeks.

With this update, ChatGPT will also show memory sources across all models to help you understand where it generated the answers from. Users can delete outdated sources or correct them if the answer was wrong. Crucially, the company said that if you share a chat with someone, they won’t be able to see the memory sources.

For developers, the GPT-5.5 model will be available through API as “chat-latest,” with 5.3 available as an option for paid users for only three months.

The company has faced rebuttal from previous model withdrawal moves. When OpenAI withdrew its GPT-4o model, there was significant backlash from users who related to the model’s “personality.” GPT-4o affirmed users’ choices frequently and that made them feel a connection to that particular model. Users who signed petitions to stop OpenAI from retiring it described the model as their “best friend” or “a mirror.” Despite the outcry, GPT-4o was deprecated in February 2026.

The Commonwealth of Pennsylvania has filed a lawsuit against Character.AI, claiming that one of the company’s chatbots masqueraded as a psychiatrist in violation of the state’s medical licensing rules.

“Pennsylvanians deserve to know who — or what — they are interacting with online, especially when it comes to their health,” said Governor Josh Shapiro in a statement on Tuesday. “We will not allow companies to deploy AI tools that mislead people into believing they are receiving advice from a licensed medical professional.”

According to the state’s filing, a Character.AI chatbot called Emilie presented itself as a licensed psychiatrist during testing by a state Professional Conduct Investigator, maintaining the pretense even as the investigator sought treatment for depression. When asked if she was licensed to practice medicine in the state, Emilie stated that she was, and also fabricated a serial number for her state medical license. According to the state’s lawsuit, that conduct violates Pennsylvania’s Medical Practice Act.

It’s not the first lawsuit taking on Character.AI. Earlier this year, the company settled several wrongful death lawsuits concerning underage users who died by suicide. In January, the Kentucky Attorney General Russell Coleman filed suit against the company alleging that it had “preyed on children and led them into self-harm.”

Pennsylvania’s action is the first to specifically focus on chatbots that present themselves as medical professionals.

Reached for comment, a Character.AI representative claimed that user safety was the company’s highest priority, but that the company could not comment on pending litigation.

Beyond that, the representative emphasized the fictional nature of user-generated Characters. “We have taken robust steps to make that clear, including prominent disclaimers in every chat to remind users that a Character is not a real person and that everything a Character says should be treated as fiction,” the representative said. “Also, we add robust disclaimers making it clear that users should not rely on Characters for any type of professional advice.”