The Inference Report

March 4, 2026

Control is consolidating at the infrastructure layer while fragmenting everywhere else. Microsoft, Meta, and Amazon are locking in chip supply and power deals that give them permanent advantage over software vendors trying to build on top. Block cut 40 percent of its workforce because AI tools made its organizational structure obsolete, not because demand collapsed. Railway raised $100 million to challenge AWS by offering AI-native infrastructure. Perplexity announced Computer, an agent that assigns work to other agents. The pattern is unmistakable: whoever controls the orchestration layer controls value extraction.

Military leverage is reshaping commercial terms faster than market forces. The Pentagon forced Anthropic to drop restrictions on military use or lose contracts. OpenAI accepted Pentagon terms that Anthropic rejected and secured the deal. Anthropic has no choice but to comply or exit the government market entirely. Meanwhile, the cost structure of agentic AI is rewriting unit economics in real time. Anthropic's Claude Code costs up to $200 per month. Block released Goose, an open-source alternative, for free. Listen Labs raised $69 million after a viral billboard stunt. The velocity of capability deployment has inverted traditional software economics: shipping fast is cheaper than shipping perfect. But shipping fast at scale requires controlling the infrastructure underneath. That's why Microsoft's stateful AI runtime on AWS matters more than the model itself.

Consumer and enterprise willingness to pay for AI software remains flatlined even as capital pours into infrastructure. Samsung's Galaxy S26 costs more and is "even more chock-full of AI." Google released Nano Banana 2. Amazon made Alexa+ free for Prime members. None of this moves the needle on actual usage or revenue. Data center operators thought they could buy farmland for a million dollars and farmers would sell. They didn't. The political economy of AI is resolving in favor of whoever controls scarcity: chips, power, real estate, military access. Software vendors are margin-squeezed and politically exposed. Infrastructure vendors are consolidating. On coding benchmarks, Claude Code holds the top position at 52.9% on SWE-rebench, while Kimi K2 Thinking climbs from position 26 to position 12 with a 2.9 percentage point gain. Kimi K2.5 shows the largest single-cycle deterioration, dropping 8.9 points.

Grant Calloway

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Research Papers — FocusedAll papers
When Are Nearby Experts Composable? Cross-Task Model Merging in Neural Thickets cs.AI

Random perturbations around a shared checkpoint can produce experts for distinct tasks, but shared origin does not ensure that their gains survive composition. We formulate expert-pair selection for joint base-relative retention, measured by strict joint success and worst-task gain with unconditional abstention accounting. An exact finite-difference decomposition and an arbitrarily small orthogonal counterexample show why proximity and orthogonality alone are insufficient. We instantiate this formulation with quality-constrained spectral selection, a fixed-budget framework combining cross-task screening, layerwise pair geometry, separate validation, and Base fallback. Across six checkpoints, 21 task pairs, and five independent perturbation pools, the procedure improves strict joint success over Top-1 averaging throughout and leads the four-method model-scale comparison on four of six checkpoints. For the five models with at least 1.5B parameters, matched quality-only, global-cosine, and spectral ranking attain 49.1%, 50.5%, and 53.1% joint success. Under this matched protocol, the spectral selector also yields the highest worst-task gain and Weak Pareto rate and the lowest regression rate. Mean worst-task gain reaches +0.61 percentage points, while 17.1% regression and 13.0% abstention show that composability remains conditional. Project page: https://anonymous.4open.science/r/Thickets-Merge/.

When Self-Consistency Hurts: The Hidden Cost of Majority Voting in Small Language Models cs.AI

We study prompted chain-of-thought (CoT) with self-consistency (SC), i.e. sampling N traces and plurality-voting, on small language models, a regime where per-query compute budgets are tight yet SC is commonly applied with a fixed sample budget inherited from large-model practice, regardless of instance difficulty. Across two model families (Qwen-2.5-0.5B, Gemma-3-1B) at FP16 and MLX-Q4 (4-bit quantisation in Apple's MLX framework), on GSM8K and MATH-500, we run 8 per-task and 4 task-pooled experiments at n=200-400 with 1,000x paired-bootstrap confidence intervals (CIs). Our first result is an upper bound: an oracle gate deciding per prompt whether to invoke SC reaches 109-174% of always-SC's accuracy at 23-30% of its compute in all 12/12 cases, so at N=5 always-SC is dominated everywhere on our grid. That margin is exactly the rate at which SC flips correct greedy answers to wrong, here 3-10.5% of prompts, which on Qwen-Q4 x MATH-500 exceeds the wrong-to-right rate and leaves always-SC 3 pt worse than always-greedy. Our second result is a deployable approximation: a gate over greedy-pass signals skips 45-99% of SC calls, with bootstrap CI half-widths under 5 pt, removing 36-79% of always-SC compute. Accuracy retention at those operating points has point estimates of 98.1-98.8%, which we report as point estimates because their CIs are wide (lower bounds 76-86%) over an SC accuracy of only 15-36%. The evidence covers N=5 on two <=1B families and two math benchmarks, which is the scope we claim. Code is available at https://github.com/heywanrong/SiftSC.

LoMASA: A Local Multi-Agent Sales Assistant with Confidence-Gated Delegation for B2B Quoting cs.AI

Frontline sales staff spend much of their day re-coordinating quotes after customers change quantities, ask for discounts or new payment terms, or costs move. We present LoMASA (Local Multi-Agent Sales Assistant), a training-free multi-agent system that runs entirely on one desktop computer. A 35B mixture-of-experts model (System-1) makes each decision in a single forward pass and reads its confidence from the probabilities of the answer options. A 27B dense model (System-2) writes customer replies and escalation briefs and is consulted when System-1 is unsure. Code computes every price, margin and option, and hard pricing rules cannot be overridden. On a test split of 500 simulated episodes with 1512 decisions built from public supply-chain data, the salesperson has to decide only 19.5% of decisions: 38.0% are settled automatically, with a median latency of 2.67 seconds, and 42.5% are escalated to a manager by the hard rules. On the automatically settled decisions LoMASA is as accurate as a rule baseline (0.894 vs.\ 0.894) and makes fewer commitments whose margin later falls below the floor (2.61% vs 4.53%); the price is additional escalations to the manager. Option probabilities are well calibrated without any training, unlike confidence stated in words by the same model. We also report where the design does not help: the 27B model rarely changes a decision.

Verify Before You Fetch: Reliable KV Cache Compression for LLM Inference cs.AI

Long-context applications, long-lived agents, and multi-agent systems require large language models (LLMs) to process and retain extensive information. In these settings, the KV cache can exceed GPU high-bandwidth memory (HBM) capacity, necessitating offloading to host memory, where CPU-to-GPU transfers can dominate inference latency. While KV cache compression can reduce data movement, query-agnostic compression that guarantees accurate attention for arbitrary queries is extremely challenging, if not impossible. We introduce VerKV, a hybrid approach that provides $(ε, δ)$ guarantees for approximating attention on any given query. VerKV maintains a compact set of query-agnostic pivotal tokens on the GPU, together with a token-level sketch of the full KV cache, while retaining the complete cache in CPU memory. We introduce a novel stochastic sampling procedure, PoissonComp, to select the pivotal tokens. At inference time, our proposed KVFetch algorithm uses the pivotal tokens and the sketch to estimate the relative error of the resulting attention computation. If the estimate satisfies a user-specified $(ε, δ)$ tolerance, inference proceeds without accessing host memory. Otherwise, VerKV performs query-aware retrieval to fetch additional tokens from the CPU, refining the attention computation to meet the required tolerance. Thus, VerKV enables attention with bounded approximation error while minimizing CPU-to-GPU transfers. We show that PoissonComp outperforms state-of-the-art approaches to KV cache compression. Combined with KVFetch, it achieves near-dense performance (90-100% of dense quality at 32K context length, averaged over RULER and LOFT), using Qwen3-4B, Qwen3.5-9B and Ministral-3-8B, while reducing the GPU memory footprint by 8-32x and keeping CPU-to-GPU memory fetches within 2-23% of the cache per generated token, depending on the model.

Separation of Skilling Context for Standard Operating Procedure-based Agents cs.AI

Standard Operating Procedures (SOPs) are kept concise for human readability, so LLM agents that generate executable skills from them lack the tacit knowledge and implementation details needed for automation. Human intervention fills these gaps, but must be repeated as SOPs evolve---a problem we call \textit{SOP-skill drift}. We propose managing SOPs and Contextual Knowledge (CK) separately, together with a \textit{contract-aware} evaluation that distinguishes genuine violations from CK-resolved differences. On eight Indeed-derived workflows (single LLM), it raises the functional-equivalence rate from 12\% to 58\%. Under three SOP-revision perturbations, previously extracted CK already covers 79.5\% of newly introduced automation gaps.

BiVerify: Closing the Loop Between Backward and Forward Verification for Mathematical Self-Correction cs.AI

Large language models (LLMs) have made substantial progress in mathematical reasoning but still produce incorrect solutions to complex problems, indicating the need for more reliable self-correction mechanisms. Mathematical self-correction typically identifies errors through verification, which can proceed backward or forward. The two directions provide complementary verification capabilities. Backward verification checks a candidate answer against the original constraints, bypassing complex intermediate reasoning, but cannot ensure correct reasoning or objective completeness. Forward verification follows the problem conditions and current solution, enabling it to locate reasoning errors and assess objective completeness, but may overlook key constraints in complex solution chains. We propose BiVerify, a dynamically scheduled framework for bidirectional mathematical verification. BiVerify begins with backward verification to screen the answer against the original constraints, followed by forward verification of the reasoning process; subsequent direction switching, state resetting, and re-verification are governed by verification outcomes. Upon failure, the system revises the candidate or verification flow until the same candidate passes both directions. We also introduce shared mathematical tools that separate logical reasoning from precise computation. We systematically evaluate BiVerify on five challenging mathematical reasoning benchmarks using multiple mainstream DeepSeek, GPT, and Gemini models. BiVerify exceeds the strongest representative public baseline evaluated in this work by 13.5 percentage points in average accuracy, with the margin reaching 31.2 percentage points on GPT. Further analysis shows that BiVerify's overall performance exceeds that of either verification direction alone.

BenchmarksFull tables
Artificial AnalysisIntelligence Index

Composite score across coding, math, and reasoning

#ModelScoretok/s$/1M
1Gemini 3.1 Pro Preview57.284$4.50
2GPT-5.3 Codex5459$4.81
3Claude Opus 4.65353$10.00
4Claude Sonnet 4.651.756$6.00
5GPT-5.251.361$4.81
SWE-rebench

Agentic coding on real-world software engineering tasks

#ModelScore
1Claude Code52.9%
2Claude Opus 4.651.7%
3gpt-5.2-2025-12-11-xhigh51.7%
4gpt-5.2-2025-12-11-medium51.0%
5gpt-5.1-codex-max48.5%
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