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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Will AI development hit a wall?
In 2025, that momentum will fade. Even some of the tech industry’s biggest optimists have conceded in recent weeks that simply throwing more data and computing power into training ever-larger AI models — a reliable source of improvement in the past — is starting to yield diminishing returns. In the longer term, this robs AI of a dependable source of improvement. At least in the next 12 months, though, other advances should more than take up the slack.
What are the promising developments?
The most promising developments look like those coming from models that carry out a series of steps before returning an answer, allowing them to query and refine their first responses to deliver more “reasoned” results. It is debatable whether this is really comparable to human reasoning, but systems such as OpenAI’s o3 still look like the most interesting advance since the emergence of AI chatbots.
Will AI’s ‘killer app’ emerge?
For most people, the rise of generative AI has meant constantly seeing prompts offering to complete your writing for you or edit your photos in ways you had not thought of — unsought, occasionally useful tools that fall well short of transforming your life.
What can we expect from killer apps?
Next year is likely to bring the first demonstrations of apps that can intervene more directly: absorbing all your digital information and learning from your actions so that they can act as virtual memory banks or take over entire aspects of your life. But, concerned about the unreliability of the technology, tech companies will be wary about rushing these out for mass use — and most users will be equally wary about trusting them.
Will Nvidia’s GPUs still rule the tech world?
The chipmaker’s huge profits have made it the target of the most powerful tech companies, most of which are now designing their own AI chips. But Nvidia has been moving too fast for rivals, and while a quarter or two could be bumpy as it goes through a major product transition, its Blackwell product cycles should carry it through the year comfortably ahead.
What are the challenges facing Nvidia?
That does not mean others will not make inroads. According to chipmaker Broadcom, three of the biggest tech companies are to use their in-house chip designs for supercomputing “clusters” with 1mn chips each in 2027. That is 10 times the size of Elon Musk’s Colossus system, thought to be the largest cluster of AI chips currently in use.
Will the stock market’s AI boom continue?
With Big Tech in the midst of an AI race that its leaders believe will determine the future shape of their industry, one of the main forces behind the AI capital spending boom will remain in place. Also, as some companies start to claim big — if unproven — results from applying the technology in their own businesses, many others will feel they have to keep spending, even if they have not worked out yet how to use AI productively.
What are the factors influencing the stock market?
Whether this is enough for investors to keep throwing their money at AI is another matter. That will depend on other factors, such as the stock market’s confidence in the deregulatory and tax-cutting intentions of the new Trump administration and the readiness of the Federal Reserve to continue with monetary policy easing.
Conclusion
The article highlights the potential challenges and developments in the AI industry in 2025. While some optimists predict continued growth and innovation, others believe that the momentum will fade due to diminishing returns. The article also touches on the emergence of new technologies and the challenges facing Nvidia in the GPU market.
FAQs
Q: What are the promising developments in AI?
A: The most promising developments look like those coming from models that carry out a series of steps before returning an answer, allowing them to query and refine their first responses to deliver more “reasoned” results.
Q: Will AI’s ‘killer app’ emerge in 2025?
A: Yes, next year is likely to bring the first demonstrations of apps that can intervene more directly: absorbing all your digital information and learning from your actions so that they can act as virtual memory banks or take over entire aspects of your life.
Q: Will Nvidia’s GPUs still rule the tech world?
A: While Nvidia has been moving too fast for rivals, it may face challenges from other tech companies designing their own AI chips.
Q: Will the stock market’s AI boom continue?
A: Whether the AI boom will continue depends on factors such as the stock market’s confidence in the deregulatory and tax-cutting intentions of the new Trump administration and the readiness of the Federal Reserve to continue with monetary policy easing.
