Key Insights on Artificial Intelligence

AI makes this Cold War more dangerous and unpredictable than the first one, despite nuclear weapons still existing

• Competition drives innovation when nonviolent, as seen in AI and electric vehicles, but becomes dangerous when states compete militarily
• FM Investments built an anti-hallucination large language model trained on 1,784 documents to simulate Fed candidate Kevin Warsh's policy positions.
• The underlying AI technology exponential has progressed roughly as expected, moving from 'smart high school student to smart college student to beginning PhD level' - Dario
• Clinical trials will accelerate but 'not instant, not infinitely fast' due to manufacturing and regulatory constraints even with AI drug discovery
• AI models already write 90% of code lines at some companies, but productivity gains follow a spectrum from lines to full end-to-end tasks
• Export controls on AI chips to China remain difficult to enforce despite bipartisan support due to economic pressures
• Profitability in AI comes from accurately predicting demand rather than underinvesting, with inference margins exceeding 50%

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