The AI boom has been built on a basic assumption: Bigger models are more powerful, and the most powerful models win. Now, the industry is about to learn what happens if that assumption starts to break. Mounting costs have already pressured users to give smaller and cheaper models a second look. This cost-conscious model-shopping is new and it's unclear how it will affect the industry, but the impact is likely to be significant. '[D]emand for intelligence is near infinite, but 80% of workloads will be running on 99% cheaper models within 12-18 months,' Armstrong wrote on X. '20% of workloads will still run on latest gen models where IQ maxing is important.' Before now, most AI companies have competed on quality, which has meant defaulting to the most advanced available model. If those same jobs can be handled by cheaper models without affecting quality, it would mean a massive shift in the economics of AI. And critically, much of the savings would be coming out of the pockets of the...
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