00:00 Speaker A
So let's take a look at this and talk about federal AI regulation from the beginning. Is there anything?
00:08 Speaker B
There will be a battle over AI regulation in 2026. It's going to be a battle between the federal government and the states, and that was evident in Trump's recent announcement. There will be conflicts over whether states will be allowed to regulate, whether the federal government will withhold broadband funding or pursue him for constitutional violations. That would be one battle. There will be another small battle between Republicans who believe in states' rights and Republicans who believe in presidential power. So look for that too. And finally, there will be a battle between European regulators and American AI companies. And it would be a continuation of several battles that major U.S. companies have fought with European regulation over the past five to 10 years.
00:54 Speaker A
And how is it going to play out between some of the biggest players that we know in the AI space, whether it's hyperscalers or OpenAI, do they have bets or horses in this race?
01:10 Speaker B
Ah, that's right. They want to be unregulated. They want a clean slate and the freedom to operate, with little, and ideally zero, regulation at the state level. What's more, they don't want to comply with European regulations, or at least not the onerous parts of them. Well, big AI companies are hoping for less regulation.
01:38 Speaker A
Your prediction number two is that AI will become valuable at an industrial level. I think this speaks to the trend of how this miraculous technology is now being used. How does it improve our lives and how does it fit into business? It's finally becoming a reality.
02:00 Speaker B
It's finally becoming a reality. We've been excited about the idea of AI for years. This is the world's largest scientific project, but there is little movement within the major organizations, and 2026 will be the year. If anything, it appears to be slowing down a bit as models converge and power plateaus, coinciding with the AI technology revolution. As that happens, it will have the most powerful impact on large organizations that we have seen in the entire revolution.
02:37 Speaker A
This is because companies are exploring ways to utilize AI.
02:40 Speaker B
I won't put that aside and ask for a side job. It has to be factored into the most important thing a company does: a complex process that involves hundreds of people and hundreds of steps, all working well together. Incorporating AI into that will be difficult, but if done well, it could be extremely valuable.
03:04 Speaker A
I couldn't agree more. The question is when? Now we have to move on. Prediction #3: I love this. The best investment is a purpose-built model, such as a small language model. Small language models are also abbreviated as slim. We talk a lot about large-scale language models, so this is your acronym. How are the little ones going to shake things up?
03:26 Speaker B
I think this is the year we realize that AGI is the wrong goal. We've been talking about it for years. You were talking about building AI that's as smart as humans, and I think that's the wrong direction of investment. We see open and small models succeeding. This is the year that the public understands that we need practical AI, not experimental and theoretical AI. So investment will be reduced and the focus will be less on building human-equivalent AI and more on building AI that can do certain jobs very well. It's not necessary to do every job. You need it to complete the task at hand. For AI to become an important practical technology in large organizations, it will require a much more focused effort than it currently has.
04:14 Speaker A
Well, I like the idea that it could potentially cost a lot less. And I'm wondering how that will affect OpenAI, and some of the biggest companies like Claudemaker. Well, how does this impact these companies that spend hundreds of billions of dollars, soon to become trillions?
04:41 Speaker B
I think this opens the door for other vendors to become strong winners in the AI market. You don't have to be a creator of human-scale intelligence in AI to be of great help to your business. You'll see experts in fields as diverse as legal, healthcare, transportation, and more adapting their own AI models to create significant impact and significant value for leading organizations without the same capital investment that the largest AI companies do. This will democratize the AI market.
05:22 Speaker A
I would love to see it. Nevertheless, spending will continue, leading to prediction number four. 2026 will focus on AGI scale with power, data, and processing.
05:41 Speaker B
That's right, the game of scale never stops and it's amazing how much money is being spent. I liken it to building railroads across the country, a power highway system, or a moonshot. That's a staggering amount, and it's not going to stop because investors are still looking to write big checks. But over time, I think we'll see that there are great ways to profit from AI beyond creating the next moonshot. So I believe the return on that investment is going to be a little bit smaller than some people are expecting, but the investment will continue.
06:22 Speaker A
And here's another thing that I find really interesting. Prediction #5 is that AI winners will have better branding and distribution. And I think about companies like Open AI. I'm not trying to bully them here, but uh, they don't have a uh distribution. They're backed by Microsoft, but Microsoft is currently exploring other partnerships and requires them to own the hardware, which they don't necessarily have at the moment. So how does this fit into your predictions?
07:05 Speaker B
I think the balance of power is shifting towards vendors who own the customer, own the eyeballs, and have brand power. I don't see OpenAI having the same top spot in that future world. I think we have great technology, but the gap is narrowing. And if you can't trust a big technological advantage, then the battle shifts to distribution advantage, where presence on the desktop becomes your biggest asset, in which case I would expect other organizations to be even more successful.
