The Great AI Reconfiguration: New Gatekeepers, New Limits, New Understanding
This week: AI assistants redirect retail traffic, data center plans shift, Moore’s Law officially dies, and we peek behind the AI reasoning curtain.
Dear Friend,
Regardless of whether you are an AI maximalist (“AGI will be here by 2027”) or an AI skeptic (“It won’t get much better than the fancy autocomplete we have today”), we like to remind people that it behooves us to, at least, consider the possibilities (both ways and everything in between). The biggest mistake I see companies make is not banking on one particular future, but rather ignoring the possibilities of multiple divergent futures – futures where some options might have a dramatic impact on our businesses and lives. As someone recently reminded me: In February 2020, the pandemic was one of twenty items on the to-do list of a busy executive. A month later, it was the only thing on the list…
Headlines from the Future
Traffic to US Retail Websites From Generative AI Sources Jumps 1,200 Percent ↗
Bill Gates said at a Goldman Sachs-sponsored event in L.A. two years ago:
“Whoever wins the personal agent, that will be a big thing because you’ll never go to a search site again. You’ll never go to a productivity tool again. You’ll never go to Amazon again. Everything will be mediated through your agent.”
The first part is becoming true now – Adobe reported that traffic from generative AI sources (e.g., the Perplexity AI search tool) to e-commerce websites jumped a whopping 1,200 percent in their latest report.
In February 2025, traffic from generative AI sources increased by 1,200 percent compared to July 2024.
No wonder Google is simultaneously freaking out and investing heavily in an AI-powered future of search. But the important bit is not just the sheer increase in volume referred to by generative AI tools, but also the quality of this traffic:
[…] consumers coming from generative AI sources show 8 percent higher engagement as they linger on the site for a longer period of time. These visitors also browse 12 percent more pages per visit, with a 23 percent lower bounce rate. This speaks to the value of conversational interfaces in online shopping, which seem to help consumers be more informed and confident in their purchases.
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(Another) Tale of Two Cities ↗
While one party seems to never end, with OpenAI raising an eye-watering $40 billion at an even more eye-watering $300 billion valuation, other parties are being called off…
Microsoft is calling off some of its data center deals:
The software company has recently halted talks for, or delayed development of, sites in Indonesia, the UK, Australia, Illinois, North Dakota and Wisconsin, according to people familiar with the situation.
Microsoft is widely seen as a leader in commercializing AI services, largely thanks to its close partnership with OpenAI. Investors closely track Microsoft’s spending plans to get a sense of long-term customer demand for cloud and AI services.
One possible reason being discussed by analysts is the increasing efficiency that some AI models exhibit:
Analysts have stepped up their scrutiny of data center spending since Chinese upstart DeepSeek announced in January that it had created a competitive AI service using fewer resources than leading US companies.
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Nvidia GPU Roadmap Confirms It: Moore’s Law Is Dead and Buried ↗
Ostensibly written about Nvidia’s plight of having to move to bigger and bigger silicon as Moore’s Law (“the number of transistors per square inch on integrated circuits doubles approximately every two years”) is dead – this is, of course, much bigger than a single chip manufacturer.
Advancements in process technology have slowed to a crawl in recent years. While there are still knobs to turn, they’re getting exponentially harder to budge. Faced with these limitations, Nvidia’s strategy is simple: scaling up the amount of silicon in each compute node as far as they can.
[…]
In any case, Nvidia’s path forward is clear: its compute platforms are only going to get bigger, denser, hotter and more power hungry from here on out. As a calorie deprived Huang put it during his press Q&A last week, the practical limit for a rack is however much power you can feed it.
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Some Good Advice on How to Use AI ↗
Quoting Ned Batchelder from his blog post “Horseless intelligence”:
My advice about using AI is simple: use AI as an assistant, not an expert, and use it judiciously. Some people will object, “but AI can be wrong!” Yes, and so can the internet in general, but no one now recommends avoiding online resources because they can be wrong.
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AI’s Hidden Reasoning: A Peek Behind the Curtain ↗
Ever wonder how AI actually “thinks”? A comprehensive research paper has explored the internal computational mechanisms of Claude 3.5 Haiku through advanced interpretability techniques. The findings reveal complex and surprising insights into how large language models actually perform computations.
The research shows that language models use sophisticated, parallel computational mechanisms. These often involve multiple reasoning pathways operating simultaneously.
Models exhibit remarkable abstraction capabilities. They develop features and circuits that generalize across different domains and contexts.
Internal reasoning processes can be quite sophisticated. They involve planning, working backwards from goals, and creating modular computational strategies.
Progress in AI is birthing a new kind of intelligence, reminiscent of our own in some ways but entirely alien in others. Understanding the nature of this intelligence is a profound scientific challenge, which has the potential to reshape our conception of what it means to think. The stakes of this scientific endeavor are high; as AI models exert increasing influence on how we live and work, we must understand them well enough to ensure their impact is positive.
[…]
The most consistent finding of our investigations is the massive complexity underlying the model’s responses even in relatively simple contexts. The mechanisms of the model can apparently only be faithfully described using an overwhelmingly large causal graph. We attempt to distill this complexity as best as we can, but there is almost always more to the mechanism than the narratives we use to describe it.
A brave new world indeed…
What We Are Reading
🤖 Why Parents Are Teaching Their Gen Alpha Kids to Use AI Some families are embracing the AI revolution by introducing their children to ChatGPT, DALL-E, and similar technologies as shared learning experiences. @Jane
👂 When You Can Tell Someone Isn’t Listening to You When someone isn’t listening to you, try taking a mental step back, assuming positive intent, asking open-ended questions, and changing the rhythm of the conversation to re-engage them. @Mafe
🚬 Zyn and the New Nicotine Gold Rush The rise and recent global explosion of Zyn is one of the last decade’s most fascinating stories of innovation, branding, and product-market fit. @Jeffrey
🧭 Be a Better Decider: As Reinvention Pressure Rises, CEOs Need to Rewire Their Decision Making In today’s AI-fueled business landscape, the smartest CEOs aren’t just chasing outcomes—they’re rewiring decision-making itself as a strategic asset. The takeaway? Tech may accelerate decisions, but it’s the process that determines if you’re building velocity or just spinning faster in the wrong direction. @Kacee
🧬 23andMe Went From a $6 Billion Giant to Bankruptcy. Its Former CEO Won’t Walk Away. It was an inspiring climb to fame after the initial lack of excitement for genetic testing was overcome. Centered around the challenge that customers’ eventual excitement would only ever lead to one test per customer, the company tried to find alternative revenue streams — but ultimately came tumbling down. @Julian
🩺 Doctors Told Him He Was Going to Die. Then A.I. Saved His Life. Scientists are using machine learning to find new treatments among thousands of old medicines, saving lives like that of Joseph Coates, who was treated with an unconventional combination of chemotherapy, immunotherapy, and steroids suggested by an AI model developed by Dr. David Fajgenbaum’s team. @Pedro
🤔 New Study Finds Social Media Breaks Don’t Improve Mood, Despite the ‘Detox’ Hype It could have been so easy: take a week or two off from your digital device, “detox,” and you would be fine. Sadly, that’s not how things work. As usual in life, it is much more complex than that when it comes to clearing our brains of the digital fog. @Pascal
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