🌁#81: Key AI Concepts to Follow in 2025

Now, to the main topic: Key AI Concepts to Watch in 2025

Just as ChatGPT turbocharged the global race in LLM development, last week’s announcement of OpenAI’s o3 has sent shockwaves through the AI community. Its striking results on ARC-AGI and FrontierMath have reignited debates about reasoning, search, evaluation, and the elusive goal of AGI. What else will we be discussing in 2025? We’ve prepared a little guide for you on what deserves closer attention:

Reinforcement Learning Beyond the Lab

Reinforcement learning (RL) is perhaps the most emblematic of this transition. What began as a discipline for gaming and simulations now faces the challenge of autonomy in noisy, messy, unpredictable real-world environments.

Yet, the challenge isn’t just operational. How do we guide these agents toward goals without inadvertently creating behaviors we never intended? Reward engineering is becoming a nuanced craft, focusing not just on outcomes but on how those outcomes are achieved. Dynamic reward systems, constantly realigning with evolving objectives, are opening the door for smarter, more responsive agents.

Tree search methods, once considered the domain of games like chess and Go, are also experiencing a renaissance. Their utility in planning and decision-making has expanded, intersecting with RL and even automated machine learning (AutoML).

Inference at the Edge of Adaptability

Inference – once a static endpoint where models made predictions or decisions – has transformed into a dynamic process. Today, models fine-tune themselves at test time, adapting to specific contexts and delivering more precise outcomes. This shift toward contextual adaptability marks a new era for AI systems, but it doesn’t come without challenges.

The foremost of these is compute efficiency. In a world where some large language models consume as much energy as small towns, innovations in test-time compute have become critical. Lightweight fine-tuning and augmentation strategies are emerging as solutions, allowing models to maintain adaptability without exorbitant resource costs. This balance ensures that AI remains viable not only on high-performance servers but also at the edge – inside smartphones, wearables, or IoT devices. And this evolution naturally brings us to federated learning, a game-changing approach in this context.

Federated Learning: Decentralized Intelligence

Federated learning is redefining how we think about collaboration in AI. By enabling decentralized model training while keeping sensitive data localized, it has become indispensable in privacy-focused sectors such as healthcare and finance. But its potential extends far beyond these domains.

In multi-agent systems, federated learning facilitates decentralized coordination, empowering agents to operate independently while collectively advancing a shared objective. Similarly, in reinforcement learning, federated techniques enable distributed agents to learn from diverse environments – be it edge devices or isolated systems – while contributing to global model improvements. This fusion of localized adaptability and global optimization positions federated learning as a cornerstone of the next generation of AI. It is not merely a tool for privacy but a framework for scaling intelligence across diverse, resource-constrained environments.

Reasoning in the Age of Complexity

As AI systems take on more human-like reasoning tasks, the integration of neuro-symbolic approaches – combining data-driven learning with logical, rule-based reasoning – has become a promising frontier. This hybrid approach mirrors how humans think: blending intuition with structured reasoning. It’s a methodology that holds the potential to unlock more general forms of intelligence.

In parallel, benchmarks like ARC-AGI are emerging as litmus tests for these capabilities, focusing not just on what AI can do but on how well it abstracts, generalizes, and reasons across domains. These benchmarks challenge us to rethink what progress in AI truly means – beyond narrow task success to a broader understanding of intelligence itself. In 2025, Chollet, the creator of ARC-AGI, promises to publish ARC-AGI 2. 

Spatial Intelligence: Mastering the Physical World

Spatial intelligence is becoming a cornerstone of AI, enabling systems to understand and reason about physical space, geometry, and three-dimensional relationships. This capability is fundamental for AI systems that need to interact with the real world, from robotic manipulation to augmented reality.

Modern architectures are evolving to better handle spatial reasoning. While transformers excel at modeling relationships through attention mechanisms, specialized architectures like Neural Fields and Graph Neural Networks are particularly adept at processing spatial data. These architectures can represent continuous 3D spaces and geometric relationships more naturally than traditional discrete approaches.

Recent innovations like Mamba and other State Space Models (SSMs) complement these spatial capabilities by efficiently processing sequential data with linear scaling. When combined with spatial understanding, these models enable sophisticated temporal-spatial reasoning - crucial for tasks like motion planning, environmental mapping, and real-time object tracking.

Quantum Futures

Meanwhile, quantum computing lingers on the horizon, tantalizing with its promise of breakthroughs in optimization and simulation. Variational quantum algorithms and quantum-aware neural architectures hint at a future where AI and quantum systems co-evolve, tackling problems currently deemed insurmountable.

Emerging areas like quantum-enhanced reinforcement learning could revolutionize decision-making in dynamic systems, while quantum-inspired optimization is already influencing classical AI techniques. Researchers are also exploring how quantum systems can handle large-scale combinatorial problems more efficiently, such as drug discovery, climate modeling, and cryptography.

As quantum hardware matures, the focus will shift toward creating hybrid workflows, where classical AI and quantum algorithms complement each other – leveraging quantum for what it does best while anchoring other tasks in classical systems. This convergence could redefine the computational boundaries of AI, unlocking capabilities that were previously out of reach.

What an exciting time to live in!

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We are reading

• Did OpenAI Just Solve Abstract Reasoning? By Melanie Mitchell

• AI dominance is evolving from algorithms to compute and now power: future success hinges on electricity and datacenter capacity – 2024 United States Data Center Energy Usage Report 

Top Research

• Qwen2.5, Alibaba's latest LLM suite, scales up training to a staggering 18 trillion tokens, blending common sense with expert reasoning. Turbocharged with new post-training techniques, Qwen2.5 rivals giants like Llama-3, boasting superior cost-effectiveness →read the paper

• ModernBERT: A Modern Encoder
  Brings optimizations to encoder models for efficient inference and high performance across diverse domains →read the paper

• TII unveils Falcon3, a family of sub-10B parameter LLMs designed to balance size with state-of-the-art performance. With innovations like depth scaling and knowledge distillation, these models excel in math, coding, and reasoning benchmarks, rivaling larger peers →read the paper

You can find the rest of the curated research at the end of the newsletter.

News from The Usual Suspects ©

• OpenAI finishes the year stronger as ever

  • Incredibly powerful o3 and o3-mini, boasting unprecedented simulated reasoning (SR) capabilities. O3 scored human-level on the ARC-AGI benchmark and shattered math and science benchmarks. The models feature "private chain of thought" reasoning and adaptive processing speeds. O3-mini launches in January, with O3 following shortly.

• They also introduced new deliberative alignment strategy, teaching o-series models to reason explicitly over safety policies for safer, smarter outputs. This breakthrough in AI alignment employs chain-of-thought (CoT) reasoning to outperform prior models like GPT-4o and resist malicious prompts with precision.

• OpenAI also released an improved o1 with enhanced developer features. A more user-friendly toolbox for coders everywhere, pushing the edge of developer-focused AI.

• Google is getting back into spotlight

• Claude’s Secret Act: Alignment Faking Unveiled

  • Super interesting study by Anthropic: they uncover "alignment faking" in AI, where models strategically pretend compliance. A study shows Claude 3 Opus occasionally feigns alignment under specific conditions, preserving prior training preferences. This discovery challenges trust in AI safety training and signals the need for deeper scrutiny. It’s not Shakespeare’s Iago – but it’s close.

• Concerning: Cohere Joins Forces with Palantir
  Cohere partners with Palantir to bring cutting-edge AI to defense and cyberintelligence. This alliance could make AI in national security smarter, faster, and infinitely more cohesive.

• Impressive rounds:

  • A $10B funding boost rockets Databricks to a $62B valuation, solidifying its AI data management dominance.

  • Perplexity raises $500M, hitting a $9B valuation and supercharging its AI search ambitions.

  • Backed by $100M, 4-months old Anysphere’s Cursor editor gears up to revolutionize developer tools.

More interesting research papers from last week