Demand for intelligence is not a pyramid with a small, wealthy peak paying for everything beneath it.
Words found on the source page on Nov 6, 2026.
More from Tomasz Tunguz
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This is the new software engineering: designing the systems that let AI write code correctly at scale.BlogThe Most Important Market in AI is the MiddleSep 23, 2026
But the right tail of the market is thinner than almost anyone forecast.BlogThe Most Important Market in AI is the MiddleSep 23, 2026
Most business AI use is the messy middle: multi-step workflows that need a smart enough model at a price a company can afford. It is the most important part of the market today, & it is where the competition is fiercest.BlogAI Comes for the If StatementSep 21, 2026
If this is the first of many primitives specialized for production, then harnesses are about to capture a lot more margin.BlogAI Comes for the If StatementSep 21, 2026
They also highlight the bifurcating economics of AI: state of the art models for discovery & optimized models for production. We use the largest frontier models to train new models, & the most capable models to architect systems. But once a system is engineered & hardened, running it thousands or millions of times through a workflow benefits from narrower AI.BlogThe AI ColanderJul 13, 2026
AI customer retention sits between mobile games and social networks. Frontier models keep the crown for about 41 days, and the price of a given level of intelligence falls roughly 10x per year, giving buyers more leverage every cycle.
On the same topics
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A world with sufficient compute is one where intelligence is a commodity, and in commodity markets margin comes from a superior cost structure, which I would expect the leading model providers to have, in part because they have a meaningful lead in scaling and can apply superior AI to their infrastructure.BlogFrontier OverhangsSep 21, 2026
Pure capability no longer translates directly into a moat.BlogAI politics & the future of growth #602Sep 19, 2026
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AI will sort the world the same way: those who harness it effectively will gain cultural and economic power, and those who don’t will become subject to forces they do not control.EssayAI for All AmericansSep 16, 2026
As AI technology accelerates development and economic precarity increases, the decisions we make in the next 36 months are crucial; we are setting a course that will determine the winners and losers, both domestically and internationally.BlogWhat would Adam Smith make of AI?Sep 15, 2026
I reckoned he’d love the technology as a productivity tool; he’d be skeptical about companies working together on any issue; and he’d be concerned about giving moral agency to machines.
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