AI Will Have to Jump Multiple Hoops to Truly Become a Force to be Reckoned With | HackerNoon

Each year in AI feels like ten years in the real world. That’s why, in this issue, I’m trying to cut through the noise for you.

I’ve been in this industry for almost a decade, and I’ve seen it evolve.

This will give you the illusion that AI can jump all the stages of “an ecosystem development cycle.”

But as I’ve explained in The AI Convergence, that’s not the case!

How fast will the entire AI ecosystem develop?

Like any other tech cycle, AI will need a complete infrastructural, commercial, and business model change, requiring 30 years for full maturation.

The “AI Convergence Thesis” posits that AI is not just another industry or technology but a transformative force reshaping the entire market landscape.

AI acts as a catalyst across three distinct phases, each expanding and redefining markets in new ways: enhancing existing Internet-native industries, enabling developing technologies to become viable, and forming the foundation for future, uncharted industries.

Each phase has its timeline and distinct impact on market dynamics, pushing AI beyond conventional uses to become an integral, multi-layered component of a digitally amplified “Web².”

This convergence could ultimately drive a redefined, AI-powered economy with significant and lasting growth potential across sectors.

AI Layer on Existing Industries (Linear Market Expansion)

• Core Assumption: AI will be added to Internet-native industries (like e-commerce, social media, digital marketing) to improve existing services and experiences, enhancing engagement and user value.
• Timeline: Immediate to short-term (next 5-10 years).
• Expected Outcome:
  • Rapid adoption across industries as AI integration expands markets with hyper-personalization and increased efficiency.
  • Linear revenue growth as AI optimizes user interactions and automates processes, driving existing players to adopt an “AI-first” strategy.
  • Market confusion among traditional industry experts who may not yet grasp AI’s potential to redefine whole sectors (e.g., social media, advertising).

Enhancer for Developing/Complementary Industries (Linear Technology Expansion)

• Core Assumption: AI enables developing technologies (like IoT, AR/VR, and autonomous vehicles) to become commercially viable, unlocking potential in new applications.
• Timeline: Medium-term (10-20 years).
• Expected Outcome:
  • Steady growth as AI improves the reliability and scalability of these emerging tech applications, supporting gradual industry expansion.
  • Known technologies progress in a linear, predictable way, yet their market applications will produce non-linear, sometimes unexpected, results.
  • Creation of new niches or sub-industries, leading to expanded economic opportunities within traditional fields (e.g., autonomous transportation, smart city applications).

Foundation for Emerging Industries (Non-linear Expansion)

• Core Assumption: AI acts as a foundational technology that will enable the rise of entirely new, uncharted industries (like brain-computer interfaces and general-purpose robotics), transforming market dynamics unpredictably.
• Timeline: Long-term (20-30 years or more).
• Expected Outcome:
  • Non-linear, transformative growth, with AI-driven breakthroughs resulting in entirely new industries.
  • High economic potential as new sectors and revenue streams emerge, driven by innovations that redefine human-technology interactions and potentially lead to trillion-dollar industries.
  • Market surprises as unpredictable, AI-dependent sectors (e.g., immersive AI-driven interactions, personalized healthcare) evolve, pushing the boundaries of what’s technologically and commercially possible.

So get ready for it!

Where are we going next?

In the business trends for 2025, I emphasized how some macro-trends are shaping the AI world in the coming year:

1. AI Scaling

• Models are expanding in capability, leveraging innovations in data (synthetic, curated), computing power, and algorithms.
• Techniques like Retrieval-Augmented Generation (RAG) enhance specialized AI applications.
• Continued development in inference architectures and post-training methods, such as Chain-of-Thought (CoT) prompting.

2. Multimodal AI

• Integration of text, images, video, and audio to create more versatile AI systems.
• Enabling advanced applications like video generation, autonomous decision-making, and contextual understanding.

3. Agentic AI

• Emergence of autonomous systems capable of multi-step reasoning, planning, and learning.
• Applications include personal agents, persona-based agents (e.g., legal or coding assistants), and company agents for customer service.

4. AI Data Centers

• Massive investments ($200 billion in 2024) in specialized AI data centers with high-performance chips, cooling systems, and scalable infrastructure.
• Exploration of sustainable energy solutions like nuclear power and liquid cooling.

5. Sovereign AI

• Nations developing independent AI infrastructures to boost economic and technological sovereignty.
• Examples: Denmark’s healthcare-focused AI supercomputer, Japan’s AI-driven 5G telecom networks, and UAE’s global testbed for AI.

6. General-Purpose Robotics

• Advances in world modeling and dexterity enabling robots to adapt to complex environments.
• Key players: Boston Dynamics, Tesla (Optimus), and Physical Intelligence (pi-zero).

7. AI Advertising

• AI-enhanced ad targeting and optimization driving significant revenue growth for platforms like Google, Meta, and TikTok.
• Integration of AI in search, creative tools, and analytics.

8. AI Video and Music Generation

• AI-driven tools for video storyboarding, editing, and multimodal content creation.
• Applications in Hollywood (Meta’s Gen AI) and productivity (Google Vids).
• AI music enhancing personalization, discovery, and monetization opportunities.

9. Autonomous Vehicles

• Advancements in large language models (LLMs) like Waymo’s EMMA integrating multimodal capabilities for better navigation and safety.
• Focus on end-to-end models for seamless decision-making.

10. AR Glasses and AI Hardware

• AR glasses like Meta Orion and Apple’s “Atlas” project as transitional form factors for AI interaction.
• Exploration of brain-computer interfaces (BCIs) and ambient intelligence for next-gen user experiences.

11. Energy Innovation

AI’s growing energy demand spurs innovation in sustainable power solutions, potentially leading to an energy revolution.

In addition, there are a few more fundamental shifts happening right now!

What fundamental shifts are happening right now?

AI Agents Redefine Work and Automation

• Trend: AI-powered agents with advanced reasoning capabilities will handle complex workflows in supply chains, HR, and customer service. Tools like Microsoft Copilot Studio democratize agent creation for businesses and individuals.
• Implications: Businesses will achieve unprecedented efficiency by automating mundane tasks, freeing human workers for strategic and creative roles. AI orchestrators will enable seamless integration across systems, ensuring scalability.
• Future Outlook: Companies will deploy “constellations of agents” working autonomously with human oversight, fundamentally altering how organizations operate.

Generative AI Becomes Mainstream

• Trend: Generative AI will evolve from prototypes to revenue-driving applications, expected to contribute $1.3 trillion by 2032. Advances in models like OpenAI o1 and Nvidia’s platforms enable new use cases in entertainment, healthcare, and business.
• Implications: Industries will leverage generative AI for product design, interactive storytelling, and marketing, increasing creative possibilities. Enterprises will build AI factories to process and transform raw data into actionable insights.
• Future Outlook: Generative AI will converge with real-time systems, making personalized applications and interactive media ubiquitous across consumer and enterprise domains.

AI-Driven Sustainability Solutions

• Trend: AI will support sustainability through resource-efficient datacenters, renewable energy integration, and tools for environmental optimization in agriculture and urban planning.
• Implications: Companies like Microsoft and Nvidia are building energy-efficient infrastructure, employing techniques like liquid cooling and using clean energy sources such as wind and nuclear power. AI tools in agriculture will reduce emissions and enhance supply chains.
• Future Outlook: AI advancements in infrastructure will reduce energy footprints, align with climate goals, and potentially catalyze breakthroughs in clean energy and resource management.

Rise of Personalized AI Experiences

• Trend: AI companions and tools will increasingly integrate emotional intelligence, providing tailored support in daily life. AI query engines and personalized “digital brains” will help individuals manage unstructured data and make informed decisions.
• Implications: Personalized AI experiences will improve productivity and well-being, with applications in decision-making, health management, and task prioritization. Enhanced realism in interactions will drive adoption across home and professional settings.
• Future Outlook: AI companions will become integral to life, offering emotionally intelligent interactions that adapt to user needs and preferences.

AI in Specialized Industries

• Trend: AI will revolutionize agriculture, engineering, and medicine, optimizing processes like crop management, structural design, and disease treatment. Tools like physics-informed neural networks and CAR-T therapy will advance healthcare and engineering.
• Implications: Industries will experience efficiency gains and cost reductions, with AI applications addressing critical challenges like food security and healthcare accessibility.
• Future Outlook: AI adoption in specialized fields will create tailored solutions for global challenges, driving innovation and economic growth.

Emergence of Humanoid Robotics and On-Device AI

• Trend: Multimodal robot models integrating vision, language, and actions will enable humanoid robotics to handle diverse tasks. Small, efficient AI models will power edge devices and wearables.
• Implications: Robotics and on-device AI will promote automation in homes, factories, and remote locations, while advancing mobility and real-time intelligence in consumer devices.
• Future Outlook: Humanoid robots will gradually enter everyday settings, supported by on-device AI for personalized and context-aware applications.

Quantum Computing Meets AI

• Trend: Quantum computing will integrate with AI to address complex challenges, focusing on error correction and drug discovery. Nvidia and others are exploring colocated quantum systems in supercomputers.
• Implications: Combining quantum and AI capabilities will accelerate breakthroughs in science, materials development, and logistics optimization.
• Future Outlook: Quantum-AI convergence will unlock transformative applications, particularly in sectors requiring intensive computations.

Decentralized and Autonomous AI Ecosystems

• Trend: AI agents will leverage decentralized systems, such as crypto wallets and blockchain, for autonomous decision-making and secure transactions.
• Implications: Decentralization will drive innovation in autonomous systems, reducing reliance on central control and enabling new business models in finance, supply chains, and digital identity.
• Future Outlook: Autonomous, decentralized AI systems will expand capabilities in governance, infrastructure, and economic activities.

What are we missing to get to the first ecosystem development cycle?

For the first cycle of AI to truly develop, we need the full maturation of a new kind of infrastructure, primarily thought for AI.

I’ve explained it in the new AI Hardware Paradigm.

As 2024 goes to an end, the interesting take is that the AI chip market is finally opening up in a way that just a year back was unthinkable, with players like Amazon becoming highly competitive and also towards players like NVIDIA.

This shows a critical thing that we’re at the initial stage, but which is speeding up, as we speak, for the infrastructural change needed for the first phase of AI mass adoption! Thus, this cycle will be completed in the coming 5-10 years.

Things are moving quite fast!

How will business models change?

AI Agents and Outcome-Based Business Models

• Agentic AI represents a transformative paradigm in artificial intelligence, where systems act autonomously to solve complex problems through reasoning and planning.
• These AI agents can gather data, analyze it, devise solutions, execute tasks, and learn iteratively, optimizing their performance over time.

Key Features

1. Autonomous Problem-Solving: Ability to handle multi-step, complex tasks independently.
2. Four-Step Process: Perceive, Reason, Act, and Learn, enabling continuous improvement.
3. Enhanced Productivity: Automates routine tasks, freeing up professionals for strategic challenges.
4. Data Integration: Leverages Retrieval-Augmented Generation (RAG) to ensure accurate and context-rich outputs.

Historical Milestones

• The 2017 “Attention Is All You Need” paper introduced the transformer architecture, leading to models like ChatGPT.
• The 2022 “Chain-of-Thought Prompting” (CoT) paper enhanced reasoning in AI models by structuring tasks into logical steps, laying the groundwork for Agentic AI.

Recent Developments

• OpenAI’s GPT-4o and rumors of OpenAI Orion demonstrate the rapid progress in AI capabilities, focusing on reasoning, multimodal processing, and efficiency.
• Companies like Google (Jarvis prototype) and Anthropic are also racing to create advanced task-assistance AI systems.

AI Agent Types and Applications

1. Personal Agents: Manage personal tasks (e.g., calendars, emails).
   • Business Model: Freemium services, B2B partnerships.
2. Persona-Based Agents: Tailored for specific professions (e.g., legal, coding).
   • Business Model: Subscription-based SaaS, enterprise licensing.
3. Company Agents: Customer-facing solutions for digital engagement.
   • Business Model: Performance-based pricing, white-label solutions.

Evolving Customer Experiences

• Transition from menu-based interfaces to conversational agents, offering seamless natural language interactions.
• By 2025, AI agents will serve as digital front doors for businesses, managing end-to-end customer engagements.
• Hyper-personalized interactions will adapt tone and content to user preferences, enhancing user satisfaction.

Business Models

1. Personal Agents

• Purpose: Assist individuals with personal tasks like managing calendars, emails, or vacation planning.
• Business Models:
  • Freemium: Free basic features; advanced capabilities for a subscription fee.
  • Subscription Services: Monthly or annual charges for personalized assistant functionalities.
  • B2B Partnerships: Integration with productivity suites like Google Workspace or Microsoft 365.
  • Licensing: Offer the technology to third-party developers for proprietary tools.

2. Persona-Based Agents

• Purpose: Specialized tools tailored for professions like legal advisors, coders, or healthcare assistants.
• Business Models:
  • Vertical SaaS (Software as a Service): Domain-specific subscriptions targeting professionals.
  • Pay-Per-Use: Monetization based on completed tasks or time used.
  • Enterprise Licensing: Customized agents for large organizations with specific industry needs.
  • Marketplace Integration: Partnering with industry platforms like GitHub or Clio for revenue sharing.

3. Company Agents

• Purpose: Customer-facing agents managing interactions, product inquiries, and e-commerce tasks.
• Business Models:
  • B2B SaaS: Subscription-based pricing for branded AI agents tailored to business needs.
  • Performance-Based Pricing: Fees tied to metrics like customer satisfaction or reduced costs.
  • White-Label Solutions: Offer customizable agent templates for company branding.
  • Integration Fees: Revenue from embedding agents into CRM or e-commerce systems.
  • Revenue Sharing: Percentage of sales facilitated by the AI agent

Future Hardware Trends

• Smartphones as AI hubs: Current focus is on integrating AI into smartphones, enabling hyper-personalized, privacy-centric, and performance-driven features.
• Potential emergence of AI-native devices combining AR and conversational interfaces for immersive experiences.

Recap: In This Issue!

• AI Convergence and Market Evolution
  • AI is reshaping industries in three phases: enhancing current sectors, enabling emerging technologies (IoT, AR/VR), and foundationally transforming markets with new industries like robotics and brain-computer interfaces.
  • Full AI ecosystem maturation expected over 30 years, with near-term focus on existing markets and mid-term expansion into complementary technologies.
• Agentic AI and Work Redefinition
  • Autonomous AI agents revolutionize workflows, excelling in reasoning and planning for supply chains, HR, and customer service.
  • Tools like Microsoft Copilot democratize agent creation; future trends include integrated AI teams working under human oversight.
• Generative AI Mainstreaming
  • Generative AI drives creative industries (media, marketing, design), poised to generate $1.3 trillion by 2032.
  • Enterprises adopt AI factories for transforming raw data into actionable insights, merging generative AI with real-time systems.
• Personalized AI and Enhanced Experiences
  • AI companions with emotional intelligence personalize user interactions for productivity, decision-making, and well-being.
  • Advances in query engines and digital brains empower users to manage unstructured data, boosting personalized decision-making.
• Infrastructure and AI Hardware Innovation
  • AI data centers evolve with sustainable technologies like liquid cooling and renewable energy, addressing growing computational demands.
  • The AI hardware paradigm shifts with competitors like Amazon challenging incumbents like NVIDIA.
• Quantum Computing Meets AI
  • Integration accelerates advancements in error correction, materials science, and logistics, redefining computational possibilities.
• AI’s Impact on Specialized Industries
  • AI-driven advancements optimize agriculture, healthcare, and engineering through tools like CAR-T therapy and physics-informed neural networks.
• Emergence of Multimodal Robotics and On-Device AI
  • Humanoid robotics integrate vision, language, and dexterity, automating tasks in homes and industries.
  • Efficient on-device AI enhances real-time, edge-based applications for consumer and industrial use.
• Decentralized and Autonomous Ecosystems
  • Blockchain and decentralized systems empower AI for secure transactions and autonomous decision-making, enabling innovative business models.
• Future Hardware Trends
  • Smartphones evolve into AI hubs; AI-native devices integrating AR and conversational interfaces expected to emerge.