00:00 Speaker A
Let’s start at the beginning and discuss these federal AI regulations. What do you have for us?
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 you saw that in Trump’s recent statements. There will be conflicts over whether states have the authority to set regulations and whether the federal government will withhold broadband funding or hold him accountable for violating the Constitution. That will be a battle. There will be another little battle between Republicans who believe in states’ rights and Republicans who believe in the authority of the president. So look for that too. Finally, a battle will break out between European regulators and American AI companies. It would be a follow-up to the many battles that major U.S. companies have waged against European regulations over the past five to 10 years.
00:54 Speaker A
What’s going on with some of the big players in artificial intelligence that we know, whether it’s hyperscalers, OpenAI, are they going to have a seat at the table in this race?
01:10 Speaker B
Oh yes, they are. They would rather not be regulated. Uh they want a blank slate where they can uh they can operate however they want and they want to deal with very little, preferably zero, state level regulations. For that matter, they don’t want to comply with European regulations, or at least not the onerous parts of them. So, um, yes, big AI companies want to be underregulated.
01:38 Speaker A
Your second prediction is that AI will become valuable at an industrial level, which I think speaks to a trend of: Well, we’ve got this amazing technology, but how are we going to use it? How will it improve our lives and integrate into businesses? This is finally becoming a reality.
02:00 Speaker B
This will eventually become a reality. We’ve been excited about the idea of artificial intelligence for years. It’s the greatest science project in the world, but it’s not generating real momentum within major organizations, and 2026 will be the year. At the same time, the AI technology revolution appears to be slowing as models converge and power stabilizes. At the same time, you’re going to see the most powerful impact on large organizations that we’ve seen in the entire revolution.
02:37 Speaker A
This is because businesses are looking into how to leverage artificial intelligence.
02:40 Speaker B
You don’t put it aside and ask it to be a side hustle. You have to build it into the most important things a business does, which are complex processes involving hundreds of people and hundreds of steps, all of which require a high degree of coordination. It’s hard to incorporate artificial intelligence into it, but when you do, it will be incredibly valuable.
03:04 Speaker A
Totally agree. The question is when. Must move on. Third prediction, I like this one. The best investments will be in purpose-built models, such as small language models. The small language model is abbreviated as slim. This is your abbreviation because we often talk about large language models. How will smaller people disrupt things?
03:26 Speaker B
I think this year we realized that AGI was the wrong goal. We have been discussing this issue for many years. Well, we’re talking about building artificial intelligence that’s as smart as a human, and I think that’s just the wrong direction to invest in. You can see the success of open models and small models. This year, the public understands that we need practical AI, not experimental, theoretical AI. As a result, there will be less investment and focus on building AI that is comparable to humans, and more focus on building AI that can do a specific job well. You don’t need it to do every job. You need it to complete the job in front of you. For AI to become a practical technology vital to large organizations, it can be even more centralized than it is today.
04:14 Speaker A
Well, I like the idea that this might cost less money. I wonder how this will impact some of the biggest players like OpenAI and then Claudemaker. Uh, you know, how is that going to impact these companies that are just spending hundreds of billions of dollars and soon will be in the 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 the creator of human-scale intelligence in artificial intelligence to be a great help to businesses. You can see experts in fields as diverse as law, healthcare, transportation, etc. adapting their own AI models to create massive impact and massive value for large organizations without having to make the same capital investment as our largest AI companies. This will democratize the AI market.
05:22 Speaker A
I’d love to see that. Still, spending will continue, which brings us to our fourth prediction. 2026 will focus on the scale of AGI driven by power, data and processing.
05:41 Speaker B
Yeah, you know, the scale game doesn’t stop and the money being spent is staggering. I liken it to laying out a national railroad, an electric highway system, or a moon landing. That’s an amazing amount of money, and it’s not going to stop because investors are still willing to write big checks. However, I think over time we will find that there are other great ways to reap the rewards of AI besides creating the next moonshot. So I believe the return on this investment will be smaller than some people expect, but will continue to invest.
06:22 Speaker A
This is another thing that I find very interesting. The fifth prediction is that AI winners will have better branding and distribution. I think of companies like Open AI. I’m not trying to pick on them here, but uh they don’t have uh distribution. They have support from Microsoft, but Microsoft is now exploring other partnerships where you have to own the hardware, which they don’t necessarily have right now. So how does this fit into your prediction?
07:05 Speaker B
I think the balance of power shifts toward those vendors who have the customers, who have the eyeballs, who have the power of the brand. I don’t think OpenAI will have the same top status in the future world. I think they have great technology, but the gap is closing. If they can’t rely on having a major technological advantage, then the battle turns to distribution advantage and being on the table becomes the biggest asset, in which case I would expect other organizations to be more successful.
