AI Will Reshape the World in 2025, and Most People Are Unaware

If 2024 was about AI embedding itself into the mainstream, 2025 will be the year AI starts reshaping it entirely.

2024 was the year AI went mainstream. But just wait until 2025.

Most people are still blissfully unaware of just how different the world is about to look. But for those immersed in the tech space, the pace of change is exhilarating—and overwhelming.

OpenAI’s latest models, o3 and o3-mini, exemplify this transformative moment. These models aren’t just smarter chatbots; they’re problem solvers, excelling at reasoning tasks like complex coding, advanced mathematics, and even scientific challenges. O3 represents a new breed of AI that not only processes data but thinks—a shift that pushes us closer to artificial general intelligence (AGI).

The o3 models achieve breakthroughs in reasoning through test-time compute, a mechanism allowing the AI to ‘ponder’ over complex problems before delivering a response. This innovative leap sets the stage for AI to tackle questions that demand deeper understanding, moving beyond rote predictions to reasoning capabilities that challenge the boundaries of what’s possible with machines.

o3 is better than 99.95% of programmers Source: X

From Transforming Industries to Challenging Geopolitical Norms

But these advances aren’t happening in a vacuum. They’re part of a broader narrative of AI-driven disruption, from transforming industries to challenging geopolitical norms.

As AI becomes increasingly integral to our daily lives, its infrastructure demands have skyrocketed. AI is no longer just a software story. It’s about infrastructure—massive, tangible infrastructure. To make AI work, we need chips, electricity, and interconnects at an unprecedented scale.

Consider this: OpenAI’s ambitions include building data centers that demand as much power as entire cities. We’re not just talking about a few racks of servers; we’re talking about infrastructure projects on par with major metropolitan utilities.

This is a CAPEX boom that doesn’t just benefit Silicon Valley engineers but electricians, construction workers, and local businesses. AI is making atoms great again, driving wealth creation across a broader swath of society than any previous tech wave.

While social media enriched a small subset of programmers and influencers, AI’s hunger for physical infrastructure is creating opportunities for the concrete mixer, the electrician, and the local HVAC shop. This isn’t just a digital revolution; it’s a physical one, with economic ripples that extend far beyond traditional tech hubs.

Test-Time Compute

But this isn’t just a story of growth. It’s a story of constraints—and cracks are already forming. Scaling laws, once gospel in the AI world, are facing practical limits.

Pretraining these massive models requires staggering amounts of data and power, pushing current infrastructure and resources to their breaking point. The hyperscalers like Google, Amazon, and Microsoft are scrambling to secure energy sources, from renewables to nuclear, to keep their data centers running.

OpenAI’s o3 introduces a promising workaround: test-time compute. This allows models to ‘ponder’ more complex questions, using more resources for tougher problems and optimizing performance. It’s an elegant solution, but it’s only the beginning.

The implications of these advancements are staggering. AI’s reach will extend into every industry, from medicine to agriculture, manufacturing to science. It’s poised to create orders of magnitude more wealth than previous technologies by impacting everything, everywhere, all at once.

Critics might call this another tech bubble, but AI has the two critical ingredients to prove them wrong: massive capital investment and unparalleled generality. It’s not just a new tool; it’s a General Purpose Technology (GPT) on the scale of electricity, reshaping the fundamental fabric of human productivity.

“This chart is pretty insane, it’s the current AGI progression in passing the ARC test. o3 already exceeded the average human decision-making scores, where will OpenAI’s o4 be in 6 months?” Source: X

Still, key questions loom large as we enter 2025. Are we hitting walls in pretraining? How do we solve reasoning at scale? When will the nation-state race to AGI begin?

OpenAI’s breakthroughs, like o1’s chain-of-thought reasoning and scaling inference compute, offer glimpses of answers. But the road ahead will test the limits of innovation, infrastructure, and human coordination.

The U.S. is leading the AI race, with regulatory frameworks emerging and partnerships between AI labs and defense sectors strengthening. Meanwhile, other nations are lagging, though that’s unlikely to last.

Europe’s regulatory-driven approach and China’s puzzling hesitation in prioritizing AI could shift as the race heats up. The geopolitical implications are profound.

National strategies around AI are emerging as critical differentiators, with some countries already positioning themselves as AI superpowers. In the U.S., regulatory efforts are balancing innovation with control, while strategic partnerships between AI labs and defense sectors signal an acknowledgment of AI’