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It's upgrade time at the Warehouse, and the technician is none other than Douglas Fargo, imported by Mrs. Frederic from Global Dynamics. He's been brought in to do a complete overhaul of the Warehouse's systems, and he and Claudia meet cute when she helps him retrieve a fallen laser tool using some nifty artifact magic. There's obvious chemistry, but there's tech work to attend to. As Fargo shuts down the old system to bring in the new, however, something unexpected happens - electronic eye devices begin to pop up all over the Warehouse, and a voice declares "Catastrophic failure deteced."
Artie recognizes the voice - it's Hugo Miller, designer of the Warehouse systems. Hugo's lab holds no major clues, but Artie heard that the former Warehouse agent had a nervous breakdown and is now residing at a nearby sanatorium. Pete and Myka head out to investigate. Meanwhile, back at the Warehouse, Claudia, Fargo and Artie come into contact with Hugo One, a holographic AI (in the form of a young Hugo) that has assumed control of the Warehouse.
Unfortunately, the older Hugo Pete and Myka find at the sanatorium isn't so in control. He's deranged and babbles incoherently. Pete and Myka attempt to communicate with him, but he snags Pete's Tesla and incapacitates the agents long enough to escape. Fortunately, they're able to track him to a park, handcuff him, and bring him along for the ride to the Warehouse.
Back inside, Hugo One has locked the Warehouse down and initiates a protocol to put the inventory - and, collaterally, Artie, Claudia and Fargo - in a deep freeze. He also puts out an APB on Pete and Myka, leading to a showdown with a convenience store clerk who believes they've kidnapped Hugo. Fortunately, they're able to escape thanks to Myka's strong kicking skills, and also relate the information to Artie that Hugo's brain work shows an entire section of his mind is dormant. Artie surmises this can only mean one thing: An artifact is involved.
While Claudia and Fargo search the aisles for what might have caused Hugo's breakdown, the sparks between them continue to grow. Finally, they encounter a spinning device called a zoetrope that belonged to psychologist Max Wertheimer. When Fargo spins it and Claudia touches him, she sees his entire life flash before her eyes, and the two surmise that this could be what led to Hugo's breakdown. Just as they're ready to inform Artie, however, drones controlled by Hugo One attack. Fortunately, the duo is able to fight off the attackers using Fargo's laser enhanced by Claudia's ring artifact and some moves from a galaxy far, far away. Giddy with triumph, they kiss, but Claudia feels uncomfortable because of Todd.
Pete and Myka arrive at the Warehouse with Hugo, but it's locked down and their attempts to enter are thwarted by Hugo One's laser-firing electronic eyes. Fortunately, Artie, having distracted the rogue AI with a game of Battleship, is able to talk it into a deal - if it will let Hugo, Pete and Myka in, Artie will facilitate the completion of Hugo's transferral into the Warehouse's computers. Hugo One agrees.
Everyone's pretty upset with this plan, but when Hugo One shuts down to allow the process to begin, Artie flips the script, ordering Claudia to hack into the system and reverse the process. When she does, Hugo One vanishes, and the actual Hugo is suddenly coherent again. Also, the electronic eyes throughout the Warehouse all shut down.
With the day saved and Hugo once again whole, Fargo finishes his upgrade and invites Hugo to return with him to Eureka to work at Global Dynamics. Hugo and Artie are relieved to be in touch again, and Pete and Myka return things to order in the Warehouse. All is not well for the entire team, however, as Claudia faces life without Todd after he breaks things off with her.