A new study from MIT suggests the biggest and most computationally intensive AI models may soon offer diminishing returns compared to smaller models. By mapping scaling laws against continued improvements in model efficiency, the researchers found that it could become harder to wring leaps in performance from giant models whereas efficiency gains could make models running on more modest hardware increasingly capable over the next decade.

“In the next five to 10 years, things are very likely to start narrowing,” says Neil Thompson, a computer scientist and professor at MIT involved in the study.

Leaps in efficiency, like those seen with DeepSeek’s remarkably low-cost model in January, have already served as a reality check for the AI industry, which is accustomed to burning massive amounts of compute.

As things stand, a frontier model from a company like OpenAI is currently much better than a model trained with a fraction of the compute from an academic lab. While the MIT team’s prediction might not hold if, for example, new training methods like reinforcement learning produce surprising new results, they suggest that big AI firms will have less of an edge in the future.

Hans Gundlach, a research scientist at MIT who led the analysis, became interested in the issue due to the unwieldy nature of running cutting edge models. Together with Thompson and Jayson Lynch, another research scientist at MIT, he mapped out the future performance of frontier models compared to those built with more modest computational means. Gundlach says the predicted trend is especially pronounced for the reasoning models that are now in vogue, which rely more on extra computation during inference.

Thompson says the results show the value of honing an algorithm as well as scaling up compute. “If you are spending a lot of money training these models, then you should absolutely be spending some of it trying to develop more efficient algorithms, because that can matter hugely,” he adds.

The study is particularly interesting given today’s AI infrastructure boom (or should we say “bubble”?)—which shows little sign of slowing down.

OpenAI and other US tech firms have signed hundred-billion-dollar deals to build AI infrastructure in the United States. “The world needs much more compute,” OpenAI’s president, Greg Brockman, proclaimed this week as he announced a partnership between OpenAI and Broadcom for custom AI chips.

A growing number of experts are questioning the soundness of these deals. Roughly 60 percent of the cost of building a data center goes toward GPUs, which tend to depreciate quickly. Partnerships between the major players also appear circular and opaque.

At Oracle AI World in Las Vegas, the software giant has been showcasing new agentic artificial intelligence (AI) features within its Fusion Cloud Applications Enterprise Resource Planning (ERP) suite, and other parts of the Fusion Cloud product line-up.

Built in Oracle AI Agent Studio for Fusion, the agents will embed within finance processes to realise productivity gains, enhance business performance, and help accounts teams stay compliant with the various regulatory regimes they must adhere to.

Speaking to Computer Weekly in advance of the supplier’s announcements this week Oracle Applications vice president Hari Sankar said that business financial functions can benefit hugely from AI.

“Firstly, accounting is governed by rules, the focus is compliance, the focus is ensuring things are done right [and] that’s a big part of the role of finance,” said Sankar. “I want to make sure that I sign on the dotted line saying these numbers are accurate that I’m complying with rules and regulations.

“That will never change but if you look at how it is performed today it’s a very labour intensive process so we believe there’s a lot of opportunity for automation.”

Sankar continued: “Secondly, a lot of accounting work tends to be back-end loaded at the end of the month or quarter. There are a lot of adjustments, reconciliations, all that needs to be done [and] these adjustments and reconciliations need to be documented because they need to be auditable.

“What AI agents give you is an opportunity to take those processes from a back-end fire drill to a set of continuous processes that happen throughout each quarter.”

Rondy Ng, Oracle executive vice president of applications development, added: “Oracle is ushering in a new era of agent-driven finance, where AI assistants turn fragmented, complex, staff-heavy processes into proactive, continuous operations that free teams to focus on judgment and strategic outcomes.

“Finance leaders gain a step change in operational efficiency and real-time business insights to help drive faster decisions and close cycles, stronger compliance and auditability, and healthier working capital.”

The new agents are prebuilt and integrate natively with both Fusion Cloud ERP and Fusion Cloud Enterprise Performance Management (EPM) at no extra cost to the customer.

The new agents include Payables Agent to help manage inbound invoices, Ledger Agent to help improve overall financial management and improve visibility, Planning Agent to help finance teams improve their planning processes, and Payments Agent to help optimise outbound payments.