AI eats the world (Spring 26) [pdf]

You can find the 4 versions of Benedict's deck here: https://www.ben-evans.com/presentations I appreciate the temporal view into this thinking. My interpretation:

Nov 2024: Don’t dismiss this; it may be the next platform shift. But the actual questions are still unsettled: scaling, usefulness, deployment, and business model.

May 2025: The model layer is already showing signs of commoditization, so the important question shifts toward deployment: products, use cases, UX, errors, and enterprise adoption.

Nov 2025: The capital cycle has become the story: everyone is spending because missing the platform shift is worse than overbuilding, but there is still no clarity on product shape, moats, or value capture. That creates bubble-like dynamics.

May 2026: Provisional thesis: models look likely to become infrastructure, while value probably moves up-stack into apps, workflows, product, proprietary data/context, GTM, and new questions made possible by cheap automation. But he is still explicitly calling this provisional.

In slide 22, it compares LLM labs (OpenAI/Anthropic) to mobile data telecoms (AT&T, Verizon, TMobile) in 2010s. The difference is that mobile telecoms follow a standard (3G, 4G LTE, 5G) and there is little to no differentiation.

A better comparison is actually AWS/Azure/Google Cloud/NeoClouds to AT&T and Verizon. The data centers follow a standard (CUDA/PyTorch/etc.) while OpenAI and Anthropic are more like iOS and Android. Both the clouds and telecoms had to spend a ton of capex to build out infrastructure first.

Because of what I think is a poor comparison, the rest of the slides make the wrong conclusions. For example, it thinks that models will be a commodity. I disagree. I think frontier models are a classic duopoly/monopoly scenario. The smarter the model, the more it gets used, the more revenue it generates, the more compute the company can buy, the smarter the next model and so on. It's a flywheel effect. This is similar to advanced chip nodes like TSMC. TSMC owns something like 95%+ of all of the most advanced node market. Back in the 80s and 90s, you had dozens of chip fabs. Today, there are only 3. Honestly, there should only be 1 but national security saved Intel and Samsung fabs.

There is evidence that the Chinese models are falling further behind, not gaining. Consolidation will likely happen soon because many unprofitable open source labs will have to merge and focus on revenue generation.

This is a reasonably well-examined take of the situation.

On the technical side, one of the additional things I've had on my mind is the potential that these mega models are in fact hiding a ton of inefficiency.

The approach of simply shoving higher dimensionality and more parameters into largely tweaks to the current models has delivered results, but it feels like "mainframe" era of computing to me.

Throwing reams of annotated human content and forcing the machine to globally draw associations from it feels clumsy. Just as people are able to learn structured knowledge via rule-systems that are successively elaborated with extensions and situational contradictions, I feel like there's probably a much more compact representational model that can be reached by adapting the current technical foundations (transformers, attention, etc.) to work well with generated examples from rule-systems, that then gets used as a base layer to augment the "high level" models that process unstructured data.

The risk for the behemoth datacenter might be similar to the risk in the early computing era of building compute centers right before the PC revolution took off.

If it turns out that there exists some more compact and efficient representation for this intelligence (which IMHO is likely given that we are still in the first generation of this technology), the datacenters may end up decaying mausoleums of old tech that has no relevance to a distributed intelligence future.

That's the big technical unknown unknown for me. How much efficiency juice is there left to squeeze, and what does that mean for a distributed landscape vs a centralized datacenter based landscape.

> What happened the last time that everything changed?

* Hardware era (pre 1995s) -> IBM, Intel, Microsoft, Apple

* Internet era (1994-2001) -> Amazon, Google, Meta, Salesforce

* Mobile era (iPhone+ era) -> Uber, Mobile Games, Youtube, Snapchat, Tiktok, Airbnb

* Cloud era (AWS+ era) -> AWS, GCP, Azure, Snowflake, Databricks and bunch of other data & database startups

AI era (ChatGPT+ era) -> Change is inevitable

I was a baby when the Internet Revolution happened. I was in high school and college when the Mobile Revolution steamrolled everything. It’s been interesting to see this one, as an adult working in the world. I wonder how far it will go.

The ratio of AI startups at YC surprised me... (slide 48). This is a clear trend.

>>Companies report ‘annualised’ revenue, defined as sum of previous 4 weeks multiplied by 13.

why is it multiplied by 13?

If coding is such a big part of LLM agents' usage at the moment, I do not understand how far the best models will continue to shine and take the largest chunk of revenue. I am far away from tech hubs but I think better harness will utilize smaller models for more constrained, efficient and reliable coding agents.

In a way this is like distilling (but it is not) but you can make better harness (tackle more edge cases, better tool/function definitions, sandbox handling, bash management, DB management, deployment management, etc.) but extracting what LLMs know into code.

Maybe I am wrong but I would like to see custom software for the last mile (tiny/small businesses) becoming a reality. AI would eat the world of software but costs would go down since you can extract value upstream from the LLMs and spread downstream through tighter coding agents.

I am building a coding agent that will not be small - it will be a lot of code, carefully mixed roles (mimic a software dev shop) with separate tools available to different roles. And all this code is generated by other coding agents. https://github.com/brainless/nocodo

I am a nobody from nowhere with 18 years of software engineering behind me. I do not care about revenue. I just want to see a regular business owner's workflow going live on their own VPS.

Lots of quotes from Mark Zuckerberg, not a lot of Zuckerberg quotes on the $80b invested in the metaverse

"Chat is a terrible UX General use needs ‘apps’"

I'm old so my computer career has gone: punch cards => calculators => command-line => GUI => touch screen => voice => chat. Chat seems to be the best blend of expressiveness and utility, with a dose of magic thrown in.

Didn't Ben Evans previously shill for bitcoin, which is now omitted in the graphs for "disruptive technologies"?

This is a marketing Gish Gallop talk that pretends to invalidate counterarguments with a couple of fantasy graphs.

tl;dr;

> "What happened the last time that everything changed?"

Honestly, I'm glad we hear more of the commoditization of AI, and I hope that the comparison of AI with water or electricity will become mainstream and that the states (as in nation states) will understand that sooner rather than later and act accordingly.

[dead]

It will literally eat the world. Just like we crowded out wild animals in a few reserved areas, so will AI data centers crowd us out.

To quite Ilya Sutskever:

> I think it’s pretty likely the entire surface of the earth will be covered with solar panels and data centers.