“How do you use AI?”

That’s my new go-to question when meeting contacts.

Admittedly, it’s self-serving. I get to pick the brains of some of the smartest investors and thinkers in the world about how they’re using the most powerful technology of our lifetimes.

Artificial intelligence (AI) chatbots have transformed my work life. I use Claude, Grok, and ChatGPT at least 50 times daily as my research assistant, writing partner, and instant answer machine.

It’s like having a brilliant intern who never sleeps, never complains, and is always ready to help.

I’ve even taught my kids how to use AI. Now, when they ask me something I don’t know, they immediately say, “Ask the lady on your phone”—their nickname for ChatGPT’s voice mode.

That simple phrase reveals so much about how this technology is becoming woven into our daily lives.

Those who say AI is a fad simply haven’t been paying attention. Or they tried the original ChatGPT two years ago, found it mediocre, and haven’t bothered with the quantum leaps made since.

• Two years ago, I barely used AI.

It was fine for creating silly pictures or asking ChatGPT to write a limerick about Rhodesian Ridgebacks, but it wasn’t truly useful for serious work.

Now? The landscape has completely transformed.

Almost monthly, a cutting-edge AI model debuts that pushes the frontier forward. There are almost too many breakthrough models to keep track of.

This rapid progress isn’t slowing down. Look at this graph showing how AI models have been steadily conquering benchmarks, with OpenAI’s o3 and Grok 3 leading the pack:

Source: Artificial Analysis

What’s driving this improvement?

• It comes down to something called scaling laws.

The two raw ingredients you need to make AI better are:

1. Data (books, essays, Wikipedia pages, etc.)
2. Compute (Nvidia [NVDA] GPUs processing that data)

Scaling laws are brutally simple: Crank up the data and computing power by 10X, and the AI’s quality roughly doubles.

This is why Elon Musk’s xAI.

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Stephen McBride is Chief Analyst, RiskHedge. To get more ideas like this sent straight to your inbox every Monday and Friday, make sure to sign up for The Jolt, a free investment letter focused on profiting from disruption.