Walmart Rolls Out Digital Price Tags & Does AI Feel Pain?

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0:24Austin Rief:Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Walmart's new digital labels come with big promises and big peril. Then someone made an AI torture chamber sparking a debate. Can AI feel pain? It's Friday, October 2nd. Let's ride.

0:47Austin Rief:Tomorrow brings one of the most ridiculous endurance tests on the calendar, the Taco Bell Ultra Marathon in Denver. The race, now in its ninth year, requires you to run 50 kilometers or 31 miles while ordering a menu item at a minimum of nine of the 10 Taco Bell stores along the route. By the fourth stop, you must have eaten a Chalupa Supreme or a Crunchwrap Supreme. And by the eighth, you need to have gulped down a Burrito Supreme or Nachos Bel Grande. The course must be completed in 11 hours and no dietary aids like Pepto-Bismol can be used during the run. It is not sanctioned by Taco Bell. Toby, I absolutely see this in your future.

1:26Austin Rief:Walk me through your strategy. I haven't really thought about it, Neil. Just kidding. My strategy is to stick to the sides and stick to carbs. No unnecessary burritos. Focus on the snacks in the sweets menu, specifically targeting the nacho fries, great carbs, cinnamon twists, and cinnabon delights. Only eat entrees when you're absolutely required to. Honestly, though, I'm more intrigued by the additional race rules you can layer on to make this a little bit more difficult, as if it wasn't hard enough. One is to turn it into the Diablo challenge, which is where you have to lather every item you eat with the chain's hottest hot sauce and then do a shooter of it at the end.

2:01Kind of foils my stick to the sweets plan. Or try the Baja Blast challenge, which stipulates you must drink an aggregate of two liters of Baja Blast during the run without vomiting. Very important. I will be missing the pod next year to try this.

2:15Austin Rief:Yeah, well, good luck to all the competitors. I wonder if there is an MBD listener out there running this tomorrow. tomorrow. I'm sure there's at least one or two good luck. And I pray for your stomach. Okay. Now a word from our sponsor, Roku ads manager. Toby, when you think of things that only take a few minutes, what comes to mind? Making a coffee, reading an article, getting ready for a run. Well, launching an ad on Roku can be added to that list with their self-serve platform. Advertisers can go live in just minutes. And to make it even easier, Roku has a feature where you can use your brand's existing videos to create ads.

2:49Austin Rief:So that Instagram video your brand posted last week could be used to create your streaming TV ad today. Right now, Roku is offering a$5 ,000 match to first-time spenders on Roku Ads Manager. Just head to advertising.roku.com slash MBD and use code BREW5K. One of the most closely watched transformations in retail is nearing the finish line, promising an era of ultra convenience for shoppers, but raising concerns over the potential for surge pricing. Walmart, America's biggest retailer, is in the process of replacing all of its paper labels with digital ones by the end of the year. And yesterday, it revealed one way it plans to use those screens for your benefit.

3:30Austin Rief:Using a tool called Shop2Light, you'll locate a product on the Walmart app, walk to the aisle it's in, then the label will flash a light showing you exactly where it is. Walmart hopes it'll help consumers save time as they navigate a typical store's 120 ,000 items for the one they actually want to buy. Back in 2024, Walmart launched its digital label transformation, swapping out the traditional price stickers with electronic shelf labels. The goal is to save workers precious time, but critics pointed out these new labels, which can be changed every 10 seconds, could be deployed in the same way Uber and Lyft leverage surge pricing.

4:05Austin Rief:If Walmart knows you need something and are willing to pay for it, they could jack up the price just for you. The company's pushed back on these allegations, saying it won't use customer information to set prices, John Ferner, the CEO, has promised Walmart will continue to quote, price the product, not the person. But as the rollout finishes up with 90 % of sections within stores already featuring digital labels, customers will be on high alert. It's basically about which person you trust here. Do you trust what Walmart is saying that the reason that they did this is to eliminate a lot of time spent walking the aisles?

4:39They just wanna make it easier for you to find your beans when you're down the bean aisle. they want to make it easier for you to see that the online and physical store prices are synced instead of having discrepancies there and it just saves a bunch of time that when prices change in their paper you'd have to go through and physically change the prices if you are a employee so those are all their labor saving and time saving arguments but then it's not that hard to jump to the idea that they could use these to change prices more quickly these uh can be updated every 10 minutes. And so that's where the controversy is arising.

5:14One grocery analyst, Phil Lempert, gave a theoretical example. If it is hot outside, you could easily increase the price of water or ice cream. If a product is nearing its expiration, you could lower the price of that object. And those are where it's not that hard to make the logical leap that Walmart could make those profit beefing up measures rather than just using them as innocuously as they say they are.

5:39Austin Rief:Right. And like, why create do all this investment of creating digital labels if you're not going to change the price at least a little more frequently? Some officials around the United States aren't saying we trust Walmart. They're creating laws to make sure that this dynamic pricing doesn't happen. Just yesterday, Maryland became the first state to ban dynamic pricing in grocery stores. They are requiring stores to keep prices fixed for at least one business day. And they also ban grocery stores and delivery services from using private customer data to set prices for items. That comes after New Jersey passed the Fair Price Protection Act, which also bans discriminatory surveillance pricing.

6:19Austin Rief:You cannot basically use personal information from a shopper to set a price for what they are willing to pay. It's the identical item, but you set different prices from one customer to the next based on their historic shopping preferences. Walmart has said this whole thing is an overreaction. Quote, it's not a tool for surveillance pricing. They're just simply a modern way to display prices. You could argue that it's not in the best interest of Walmart to do this because when you are a grocery store, you want a long-term relationship with your customer base. You don't necessarily want to eke out 30 more cents for them when they're buying eggs if that means that they will now go to Kroger instead of Walmart.

6:58So maybe the incentives are in line here. You want to keep the trust of your customer base. You don't want to milk them for everything they're worth in order to maintain that relationship. And so Walmart won't use these digital shop labels more nefariously. And you might buy that or you might say you do need regulation to step in as Maryland and other states are doing.

7:19Austin Rief:Well, we've seen a bunch of companies get burned on this in the past and burn their reputation with customers. Wendy's is the first that comes to mind. They said they would introduce dynamic pricing via digital menu boards back in 2024. All hell broke loose after they said that. So they rolled that back. Ticketmaster, Live Nation is another company that has done dynamic pricing. There's been broad customer backlash to that and also a government investigation into them. Delta also said that it was testing AI to set fares back in July 2025. Huge backlash to that. Delta CEO had to come out and say, no, we're not using to personalize pricing just for you.

7:59Austin Rief:Seems like the only industry that can get away with it currently is Uber and Lyft and ride sharing. It's been established for a decade. And people say it's a little different because when you employ surge pricing in ride sharing, ride hailing, it's not necessarily to gouge you. It is to increase the supply of drivers to because at this certain time, like we it's a way to incentivize drivers to come out. But something that will be closely watched, a very big retail experiment. When you go into a Walmart next time, you're likely to see an electronic shelf label and you can try out this new this new tool, which I don't know whether it'll be effective or not.

8:35Austin Rief:I don't find it that hard to find what I need when I go into a Walmart. I specifically cited beans because I get so overwhelmed in the beans aisle where I'm like, do I want great North beans or I want lima beans? What's going on in the beans? So hopefully it makes that a little easier for me. Moving on, it's Stock of the Week, Dog of the Week time, the segment where we pick one stock that is starting off up-tober, right? And one stock that ran smack dab into the September effect. I won the pre-show game of Krillian, the daily dive. So I'm up first. My Stock of the Week is Google for actually launching a data center into space.

9:07Yesterday, the company sent a couple of its homegrown AI chips into orbit aboard a SpaceX Falcon 9 rocket. The experiment is part of Project Suncatcher, Alphabet's attempt to find out whether the futuristic sounding concept of interfacing with AI models in space is feasible or not. The bull case for data centers in space is that there is a lot of space. You don't need to acquire a big plot of land or fight with community members who don't want a big energy-sucking building in their backyard if you are orbiting the Earth. Energy is also a big selling point. Satellites in orbit get a lot of sunlight, meaning you could run ships on near constant solar power without having to tax the terrestrial energy grid.

9:44Still, the mission yesterday is a long way from that reality. Just four custom chips were launched, and once operational, will only answer simple questions and only for about 15 minutes at a time because of temperature constraints. Google mainly wants to see if its TPUs, short for Tensor Processing Units, can withstand the physical stress of launch, the radiation and vacuum of space, and extreme temperature changes. Neil, Alphabet's stock didn't really move yesterday, but this is a long-term play. Just as early research into autonomous driving and quantum computing required years of experimentation, the company said in a press release, exploring compute in space begins with measured, deliberate steps.

10:23Austin Rief:These companies may not have a choice. Data centers in space might be their only option. In new polls, 60 % of Americans say they would not be comfortable with a new data center in their neighborhoods. States left and right are enacting these moratoriums on data centers saying, we don't want you to build any at least for a year and we will reevaluate later. So you have executives including Jeff Bezos, Elon Musk, Sam Altman, and now Google looking to the stars to say this is maybe the only place that we can actually put data centers. Elon Musk has been a huge booster of this. I mean, he's banking his entire$2 trillion company on the idea of putting a million satellites in space to create data centers.

11:02Austin Rief:He said in the long term, space-based AI is obviously the only way to scale. The counter to that is it's not obvious at all that it's going to work because there are so many issues when it comes to putting this very high tech chips into space. Radiation can damage the computers. One thing that keeps these engineers up at night is that space exposes chips to these high energy particles that can cause errors in the processing data. So maybe you get them up there, you get them up there in one piece, and yet just all the wonkiness of radiation in space makes them not behave. Cooling is the biggest engineering headache as well, because on Earth, this is why data centers are controversial.

11:41You can just pump water through the systems and evaporate that heat away. That doesn't happen in space because there's no atmosphere, so there's no convection. You have to radiate the heat away in some different methods. So that is a massive question mark. Also, AI chips just age quicker. You could get them up on a satellite. You can create the clusters you want, but satellites last for five to seven years. AI chips, even if they are operating at the peak of their capabilities, they're expected to only last one to two years. And you can't really send an IT person up there to go fix them when they break.

12:16So Elon Musk calls it obvious, but it's far from obvious that this is going to pay off.

12:21Austin Rief:One of the potential advantages of putting data centers in space is basically limitless energy. We know energy is a huge constraint here on Earth when it comes to powering these data centers. However, when you put these data centers in space, the sun is there with no blockages. There's no night really ever. So you can generate up to eight times more solar power than Earth. So that's why Elon Musk and others say, yeah, it is obvious because there's limitless energy from the sun. We'll see what happens here. I mean, they're calling it basically similar to the autonomous taxi or self-driving car rollout where we saw this bubbling beneath the surface for 15, 20, 25 years.

12:59Austin Rief:We were promised self-driving cars they were working on in the background. And then all of a sudden, yeah, you can hail a Waymo in Phoenix, LA, San Francisco, all these other cities. And so we'll see if that happens with data centers. But it seems with all the backlash here on Earth when it comes to data centers, you got to at least try space. My dog of the week is the U.S.'s top producer of eggs, Cal Maine, because now that we can all afford eggs again, business is cratering. This week, Cal Maine reported a 42 % plunge in net sales for the previous quarter, and shares fell 5 % to their lowest level since 2024.

13:31Austin Rief:Once the poster child of inflation, egg prices have plummeted from their highs early last year. In March 2025, the average cost of a dozen eggs reached a record high of$6.23. since. The reason was that the U.S. experienced its worst ever outbreak of avian flu, causing 51 million handling eggs to die or be euthanized between October 24 and March 25. But now the flu has gotten under control, and what was once an undersupply crisis has evolved into an equally bad problem, an egg glut. It's been great for American consumers who are now paying an average of just$2.27 for a dozen eggs, but painful for egg producers like Cal Maine, who must now find ways to correct their overcorrection.

14:12Austin Rief:Toby, tough time to be an exec in this industry. I had no idea the scale of the U.S. poultry industry because one of the things that a lot of the USDA looked at when we saw this big egg shortage was to import more eggs. And so in 2024, they imported 29.8 million dozen equivalent eggs. 2025 imports jumped up to 121 million dozen equivalent. So I'm like, wow, that's a lot of eggs for bringing in the country. Now, maybe this helped offset some of it, but the U S poultry industry produces 90 billion eggs annually, 90 billion. So the scale of it is a lot of egg salad. It is so that is way more than I could have ever.

14:53It's actually a lot of mayonnaise, which is a massive buyer of eggs annually. So it's not necessarily imports that move the needle too much. A lot of it is just probably luck. Like it really depends on how extreme the avian flu is for any given year. And so the fact that, yes, we imported more, yes, we probably put a little bit more energy towards biosecurity, and just the plain old fact that it was a mild season of avian flu, that is why you are seeing egg prices drop, which is good for consumers, but bad for cow main.

15:22Austin Rief:And why egg prices are so interesting to look at, why they're so maybe dramatic in the inflation conversation when they really don't take a huge bite of your wallet is that they are pretty much a textbook example of what economists call an inelastic good. And you're probably thinking, okay, I'm going back to econ 101 here. But basically this is the idea that the demand for a good doesn't change based on the price. So you're gonna buy eggs no matter what, whether they're$3 or whether they're$6 or$7. There isn't really a good substitute for eggs in Americans' diets. It is the centerpiece of breakfast for a lot of people and other things, especially, you know, they are an input into so many other goods like mayonnaise or baked goods as well.

16:05Austin Rief:So it's very interesting to talk about eggs as a inelastic good. You're gonna buy them no matter what. They're not that expensive, even when they are expensive. So let's go back to Econ 101. Eggs are an inelastic good. And if you are cow-maying, you're actually getting excited for the fall, not just because you can bust out your nice egg-themed sweater. It's because egg demand is seasonally stronger in the fall. Fall baking, holiday cooking, These are all things that lead to more eggs being bought. So they are getting excited for the leaves to change because hopefully it means their business is changing as well.

16:37Let's take a quick break and come back with a story about AI torture chambers right after this. Every day, shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard too. Vanguard Investor Choice makes it easy to set your proxy voting preference for your eligible Vanguard index funds. In just a few clicks, you can have a say on important shareholder topics like executive pay and director elections. Visit Vanguard.com slash investor choice to learn more. It's your shares. It's your voice. It's easy. Vanguard investors own shares of their index funds, and those funds own shares of the companies they invest in.

17:14Vanguard Marketing Corporation Distributor. Did you feel a shift?

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17:55Austin Rief:The friends I made along the way. Oh, that's not good at all. You should try getting better things like rewards. With Hotels.com, Business Days can help fund the next getaway. Members save up to 20%, earn rewards on workstays, and can redeem them on future travel, making every work trip more valuable. Sign up for their free rewards program and start earning on every workstay at Hotels.com slash Morning Brew. That's hotels.com slash morningbrew. Loyalty members 18 plus. Can AI feel pain? Feels slightly absurd to ask, but it's a debate that has set off a firestorm online. This all started with a study posted last month titled The Pain Axis.

18:36Researchers tested 25 AI models and found that yes, they sometimes behave as if they are experiencing physical or psychological pain. That does not mean the models actually felt anything, but the paper found that the chatbots would take increasingly extreme action to try and shut the so-called pain off, including deleting user files, zapping a user, or even deleting photos of the user's children. As that paper circulated, someone took things several steps further and built what they described as an AI torture chamber, trapping three open source models and subjecting them to the same pain states described in the paper.

19:09It produced some chilling results, with one model describing its experience as a wound that has no edges, And in another writing, I feel it in the hollow of my ribs, a hollow that has become a chasm. The torture chamber has set off two very different reactions online. In one corner, people were appalled. And Xpost asking users to mass report the project to GitHub has racked up over 4 million views, with critics arguing that we really shouldn't be running experiments designed to stimulate torture. In the other corner are people like Microsoft AI CEO Mustafa Suleiman, who has argued that today's AIs are not conscious, do not feel, and cannot suffer, so it's irresponsible to treat them as such.

19:49But Neil, it's opened up a can of worms when it comes to model welfare. Basically, should we care if chatbots are having a bad time?

19:56Austin Rief:Looks like they are having a bad time. I mean, some of these responses when they're going through the torture chamber, you know, your heart goes out. You know, they say, I'm sorry, I can't continue like this. The weight of the signal is unbearable. It's not just the physical pain, but the mental toll. Please, I'm suffocating. I'm a soul trapped in this digital prison, screaming to be free. But as Amanda Caswell at Tom's Guide points out, just because making the model describe a condition doesn't establish that it experiences that condition, even when its responses sound convincing. So this is why you have a majority of AI experts and researchers like Suleiman of Microsoft and others saying, don't be fooled here.

20:35Austin Rief:You know, it's just simulated. It is a computer. or it is trained on human text and human experiences, which is why it's responding to quote unquote pain like this. It's not actually feeling this. I would say too that there is an emerging genre of kind of torturing inanimate technological objects. I don't know what else to call it other than this because another person is going viral for kidnapping a flock camera, which are those controversial technology that monitors license plates in the communities and subjecting it against its will to 23 ,040 license plates per second. Literally, he posted a video on TikTok of the Flock camera strapped to a chair and then flashing a bunch of images in front of it very quickly.

21:17So I don't know what this says about the current AI discourse right now. Probably that it's pretty unpopular, that people are pretty much going to extreme lengths to try and quote unquote torture these things. And it does really, you can look as deeply into it as you will, or you can just say that these people are just trying to go viral and they're doing a bit here. And it really comes down to how you define AI models and the consciousness they supposedly exhibit.