Last month the Stanford Institute for Human-Centered AI – an interdisciplinary institute established in 2019 to advance AI research, education, policy, and practice – published its 2025 AI Index Report, which aims to “develop a more thorough and nuanced understanding of the complex field of AI.”
The report had a number of important takeaways that impact all of us running businesses. Here are the five biggest takeaways.
Large Language Models Are Getting Smaller and Cheaper
The report says:
In 2022, the smallest model registering a score higher than 60% on the Massive Multitask Language Understanding (MMLU) benchmark was PaLM, with 540 billion parameters. By 2024, Microsoft’s Phi-3-mini, with just 3.8 billion parameters, achieved the same threshold. This represents a 142-fold reduction in over two years. Depending on the task, LLM inference prices have fallen anywhere from 9 to 900 times per year since 2022.
Why this is important for your business:
As I wrote previously here, it’s becoming more affordable for businesses of all sizes to build their own AI solutions using company data from many different sources. The biggest obstacle remains the price of a developer or IT person sufficiently versed in these tools to do the work.
Problematic AI Jumps
The report says:
The number of Al-related incidents rose to 233 in 2024 reached a record high and registered a 56.4% increase over 2023. Among the incidents reported were deepfake intimate images and chatbots allegedly implicated in a teenager’s suicide. While this isn’t comprehensive, it does show a staggering increase in issues.
Why this is important for your business:
AI is being used for bad stuff. As business owners we have to let others worry about those terrifying Terminator-Type risks that could destroy human civilization and instead focus on getting training and tools to combat the growing use of AI to fool our employees into downloading malware, opening up our systems for data breaches or inadvertently transferring money out of our accounts.
More Useful Agents Are Rising
The report says:
Al agents show early promise. In short time-horizon settings (two hours), top Al systems score four times higher than human experts, but when given more time to do a task, humans perform better than Al-outscoring it 2-to-1 at 32 hours. Still, Al agents already match human expertise in select tasks, such as writing specific types of code, while delivering results faster.
Why this is important for your business:
AI agents are rolling out this year but few are worth using in your business due to their immaturity. That’s for now. In the meantime we should still be testing them and getting familiar with their capabilities. Within the next few years agents will be commonplace, performing a great deal of work that our employees are currently doing. Some business owners will (rightly) see this as an opportunity to reduce staff. But smarter leaders understand that their job is to prepare their best people to leverage these tools to be even more productive.
AI Investment Is Sky-High And Going Corporate
The report says:
The U.S. widened its commanding lead in global Al investment. U.S. private Al investment hit $109 billion in 2024, nearly 12 times higher than China’s $9.3 billion and 24 times the UK’s $4.5 billion. Businesses are turning to Al. In 2024, the proportion of survey respondents reporting Al use by their organizations jumped to 78% from 55% in 2023. Similarly, the number of respondents who reported using generative Al in at least one business function more than doubled-from 33% in 2023 to 71% last year.
Why this is important for your business:
AI is real. Right now it’s a big corporation game with larger brands sinking hundreds of millions of dollars in agentic and generative AI systems that do everything from writing software code to autonomously handling customer service requests. Ultimately these things will pass down to small and mid-sized companies who opt to wait for their core software vendors to introduce AI features into their business processes.
Regulations Move to the States
The report says:
U.S. states are leading the way on Al legislation amid slow progress at the federal level. In 2016, only one state-level Al-related law was passed, increasing to 49 by 2023. In the past year alone, that number more than doubled to 131. While proposed Al bills at the federal level have also increased, the number passed remains low.
Why this is important for your business:
I’m not expecting significant regulations coming at the federal level in the short term. Most will be at the state level and focused on two things: misusing AI in the hiring process (it can be biased) or duping customers with questionable AI bots. Of course, many of these regulations will be decided on by regulators who may be challenged turning on their own TV sets, let alone understanding the implications of AI. But regardless, it will be important to monitor these rules in your state to make sure you’re complaint.
The above five trends are important for business owners and managers to keep in mind as they’re considering AI and other technology investments. And yet as interesting as they are now, won’t it be fascinating to see what their 2030 report has to say?
Read the full article here
