2025 has been an amazing year for startups, and personally as well. I am genuinely excited what's in store for us in 2026. Here are some contrarion and not so contrarion predictions about how AI is going to evolve come 2026.
- YEAR OF SMALL LANGUAGE MODELS.
The AI infra will pick up a lot of steam and revenue in Small Language Models (SLMs) as compared to LLMs. If LLMs are all knowing omnipotent gods, the requirement of enterprises is task based, evolving systems with world knowledge of specific topics with low latency and cost. SLMs fits this kind of bill perfectly. Most of this development will be inhouse through the experts as management wants higher intelligence embedded into the applications which is reliable. This is why it makes such a strong case for infrastructure play, that too open source. Infrastructure from data annotation, to RL environments, to eval and evolving schema. Everything is crucical.
- AI SOCIAL MEDIA (the consumer movement)
We will start seeing cracks in social media finally. The long lasting bastion of the giants like Facebook, X and others might just show some gap for others to create space in. AI will allow easier engagement with Videos and Content. Thus a deeper need of personalisation / fine tuning is required for these models to allow it to happen.
The moat and network effect would come from personalisation, engagagement and social status. Revolving content around
- DUMB NICHES -> MARKETPLACES
- POPULAR NICHES -> MARKETPLACES
- LESS API, MORE MCP
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