AI's new North Star: Intelligence per dollar

AI's new North Star: Intelligence per dollar Star trails centered around the North Star. Science Photo Library/Reuters Connect The AI industry has spent the past few years obsessing over one question: Who has the smartest model?That still matters. But a new north star is emerging: how much useful intelligence can be delivered for each dollar spent.A lot of models are now good enough for many business tasks. Once that happens, buyers start caring less about the absolute best model and more about the cost of getting reliable work done with AI.Eugene Kim's recent scoop on Amazon's rebuild of Alexa+ is a good example. Internal documents show the company routing more requests to its own less-powerful AI, while avoiding unnecessary calls to Anthropic's pricier, higher-performing models.The goal was not to make Alexa use the smartest model every time. It was to use expensive intelligence only when the job required it."This is a very strong and real trend," said Kylan Gibbs, CEO of Inworld, which develops powerful voice AI. "We're reaching a state where many models are good enough, and in that context, it really becomes about efficiency."His company has created separate research teams focused on making Inworld models cheaper and faster to run, not just more intelligent. So, what's the best AI model, per dollar of intelligence? This is harder to answer than when the industry was focused on pure performance. Still, Peter Gostev, AI capability lead at Arena AI, shared four things to consider:How good is it? How reliably does the model complete real work?What does it charge? Compare the cost of both reading a request and producing an answer. Some model providers charge more for especially large jobs.How much can it reuse? Reusing information already processed can dramatically reduce the bill.How much work does it take? A model that's cheap on a per-token basis may still cost more if it needs extra steps or repeated attempts to finish the job.Peter was reluctant to share a clear ranking of AI models based on these criteria, partly because this trend is so new.However, this is becoming increasingly clear: The smartest model may still win the headlines, but the model that delivers the most useful work for the money will win the market.Sign up for BI's Tech Memo newsletter here. Reach out to me via email at abarr@businessinsider.com. Read next Alistair Barr is the author of Business Insider's Tech Memo newsletter. Sign up here. Before that, he was BI's Global Tech Editor and the Big Tech team leader at Bloomberg, following a reporting career at The Wall Street Journal, USA Today, Reuters, and MarketWatch. Alistair won a Gerald Loeb Award in 2007 for coverage of short selling and was a finalist in 2013 for scoops on the Facebook IPO. More recently, he won a 2024 San Francisco Press Club award for commentary. Got a tip? Reach out using the secure messaging app Signal (+1 415-341-4927) or via email on abarr@businessinsider.com.ExpertiseAlistair oversees all things Big Tech, along with startups and venture capital. He writes analysis and columns about topics including generative AI, large language models, cloud computing, semiconductors, online search, e-commerce, EVs, robotics, and autonomous vehicles.Popular StoriesArtificial Intelligence:It's getting harder to make big leaps at the frontier of AIOpenAI's AI-adjusted earnings numbers have echoes of Groupon and WeWorkDeath by LLM: Stack Overflow's decline, and its plan to survive, shows the future of free online data in an AI worldCloud computing:Amazon dominated the first cloud era. The AI boom has kicked off Cloud 2.0, and the company doesn't have a head start this time.In cloud, there's AI (which is hot) and everything else (which is not)Chips:Why Intel is still so important: Real countries have fabsApple's made-in-the-USA chips signal a turnaround for the US's big semiconductor betEVs and Tesla:Tesla's AI supercomputer has a Silicon Valley town rushing to meet surging electricity demandTesla's Cybertruck is outselling almost every other EV in the USOnline Search:Google is losing its status as a verbA simple way to fix search: Bright pink ads Artificial Intelligence AI Tech More