The Inference Report

July 28, 2026

"The infrastructure layer is consolidating, and software margins are collapsing faster than the market can price it." Microsoft's move from licensing software to licensing dependence, bundling security tools that undercut competitors while selling the models, infrastructure, and platform beneath them, signals a structural shift in how AI companies extract value. Satya Nadella's warning that companies need their own models or face extinction reads as a threat backed by Microsoft's control of the entire stack. Verizon's $1 billion dark fiber deal with Google, positioned as the first of many, confirms that telecom companies have abandoned connectivity as a growth vector and now see themselves as landlords of the physical substrate that makes AI margins possible.

The training data moat is cracking under legal and technical pressure simultaneously. Google and Reddit lost their DMCA case against a web scraper, collapsing the legal fiction that platforms own their data. ChatGPT's new guardrails capture broad qualities instead of exact style replication, a technical workaround to a legal problem that won't stay solved. The artist lawsuit over meme generator templates using personal work as ad copy shows the liability surface is widening faster than anyone anticipated. These aren't edge cases. They're tremors of a system where the value extraction model built on free user data hits actual friction, and the only responses available are better audits or better fences. Neither addresses the core incentive: the pressure to ship wins beats the pressure to ship safely when funding and competition reward speed.

Safe Superintelligence's $5 billion Nvidia partnership and Ilya Sutskever's emergence from stealth confirm the frontier is consolidating around capital concentration and chip access rather than open competition. Google's AI Overviews now appearing in 43 percent of searches represents the endgame of the search moat: the company doesn't index the web anymore, it replaces it. Meanwhile, the gap between SWE-rebench rankings and Artificial Analysis data reveals fundamental disagreements about what matters. SWE-rebench elevates specialized agent frameworks like JunieAgent to second place, while Artificial Analysis clusters Anthropic and OpenAI variants at the top, a divergence that reflects evaluation scope rather than genuine model performance. The practical signal is clearest on SWE-rebench's top twenty, where the 62.7% to 38.4% spread separates systems with meaningfully different engineering performance. Below that, both systems show saturation, suggesting evaluation lag rather than genuine parity.

Application-layer capital is still flowing, but infrastructure bets are where the real money moves. Enigma's $71 million seed for robot control and Cursor's India expansion show venture belief in applications persists, but Google DeepMind's tiering strategy, Microsoft's workflow integration, and AMD's focus on inference optimization for million-token contexts reveal where the actual competitive frontier sits: not raw capability, but the engineering required to run long-horizon agentic workloads cheaply and own the deployment relationship. GitHub's trending repos bifurcate between concrete infrastructure solving real problems at scale (Jenkins automation, Cassandra, open-code-review from Alibaba) and exploratory applications (Airi playing Minecraft, Kronos trained on financial language) that trend on novelty rather than operational value. The discovery tier shows where engineering effort concentrates: speech synthesis, inference optimization, and multimodal data pipelines. That's where the real work is, not in building new models, but in the plumbing that lets them work in production.

Grant Calloway

AI LabsAll labs
From the WireAll feeds
Research PapersAll papers
ClinFusion: A Vision-Centric Multimodal LLM System for Holistic Medical Understanding cs.CV

Multimodal large language models (MLLMs) hold immense potential to revolutionize clinical practice, yet deploying them in the medical domain is fundamentally a vision-centric challenge: models must absorb knowledge from heterogeneous 2D and 3D medical images, and evaluation protocols must align with radiologists' clinical practice and provide an accurate, fine-grained and factualness-driven assessment. In this paper, we introduce ClinFusion, a vision-centric MLLM designed for holistic medical understanding that systematically addresses these limitations. We propose a compositional and cascaded vision encoder architecture featuring a Cascade Spatial-Aware Locality Fusion operator that unifies diverse 2D and native 3D medical image understanding within a fused encoder. We further introduce a vision-grounded evaluation framework, including MedIF-Bench for instruction-following assessment and a region-of-interest-grounded method for clinically aligned and factualness-driven report generation evaluation. We show that ClinFusion sets a new state-of-the-art across a comprehensive suite of 2D and 3D multimodal medical benchmarks---spanning visual question answering, report generation, and instruction following---as well as textual medical tasks, outperforming leading open-source medical MLLMs (\textit{e.g.}, Hulu-Med, Lingshu) on 20 out of 24 benchmarks and demonstrating multimodal capabilities better than powerful proprietary models such as GPT-5.2 and Gemini-3-Flash on 13 out of 16 benchmarks, and can be further augmented with agentic tool use for retrieval-augmented and tool-assisted clinical workflows. A blinded evaluation by board-certified radiologists confirms that ClinFusion produces the highest-ranked reports, and validates our RoI-grounded metric as achieving the strongest correlation with expert judgment among all automatic evaluation metrics examined.

Certified Parallel-in-Time Sinkhorn for Dynamic Entropic Optimal Transport cs.DC

Dynamic applications, including optimal-transport Flow Matching, repeatedly solve related entropic optimal transport problems, yet conventional distributed Sinkhorn processes frames sequentially and synchronizes after every iteration. We present TemporalSinkhorn, a parallel-in-time executor that batches future candidates and their repairs without making output accuracy speculative. A centered, row-sharded certificate accepts only a deterministic safe prefix. The remaining candidates share packed Sinkhorn updates; an online projective forgetting rate places audit milestones, while a posteriori residual checks recover from every depth underestimate. Prediction can therefore change work placement but cannot authorize an inaccurate output. On 4 A100 GPUs, a 60-run, five-seed grid at n = 2048 shows that forgetting-guided milestones reduce wall time by 1.15x-1.47x relative to auditing every packed iteration in five statistically resolved regime cells. Against a sequential soft c-transform warm start, temporal execution is 1.42x-3.55x faster across six synthetic streams, with zero marginal-tolerance violations. On Flow Matching minibatch streams, temporal execution is 3.054x-3.632x faster than sequential carry at n = 2048, with no tolerance violations. A separate fixed-kernel test on an RTX 4060 Laptop GPU gives a 4.315x geometric-mean speedup. These are complementary deployment studies rather than a controlled hardware comparison. End-to-end Flow Matching integration, optimized-solver comparisons, and multi-node validation remain open.

Learning Distributions from Multiple Data Providers cs.DS

Motivated by learning from heterogeneous and overlapping data providers, we study a stylized model of distribution learning from restricted conditional samples. The goal is to learn an unknown distribution $p$ on a finite domain $[n]$. The learner is given a fixed family of queryable sets $\mathscr{S} \subseteq 2^{[n]}$, and each query to $S \in \mathscr{S}$ returns an independent sample from the conditional distribution $p(\cdot \mid S)$. Learnability is governed by the co-occurrence graph associated with $\mathscr{S}$: two domain elements are adjacent if they appear together in some queryable set. Pointwise consistency is achievable when this graph is connected on the target support. PAC learning requires more: it is possible when the co-occurrence graph is complete. The optimal sample complexity of PAC learning ranges from nearly linear to quadratic. Every query family with complete co-occurrence graph admits sample complexity $\widetilde O(n^2/ε^2)$, and this bound is tight in the worst case. On the other hand, if $[n]$ is queryable then ordinary sampling improves the bound to $Θ(n/ε^2)$, and this cannot be improved further even if every set is queryable. More generally, we identify hierarchical comparabilityas a sufficient structural condition on $\mathscr S$ under which the optimal complexity is nearly linear, $\widetilde Θ(n/ε^2)$, with pairwise query families as a canonical example. Finally, the full range of polynomial rates between linear and quadratic is attainable: for every $α\in (1,2)$, there exists a query family with optimal PAC rate $\widetilde Θ(n^α/ε^2)$.

Rethinking Classifier-Free Guidance in On-Policy Diffusion Distillation cs.CV

On-policy distillation (OPD) adapts diffusion models by querying a teacher along trajectories generated by the current student, but how it should behave under classifier-free guidance (CFG), a default component of modern diffusion systems, remains poorly understood. Existing OPD methods naturally extend velocity matching to the CFG-composed prediction, directly matching teacher and student guided velocities. We show that this objective is under-identified at the branch level: positive- and negative-branch errors can compensate in the guided prediction. Through two contrasting cases, we find that naive matching remains effective under shared negative conditioning, where both branch errors decrease jointly. When the model's native CFG schema retains privileged information in the teacher's negative branch that is unavailable to the student, however, this joint reduction breaks down and the composed objective induces antagonistic branch-error dynamics, reducing the positive-branch error while increasing the negative-branch error. We term this failure mode Negative Branch Asymmetry (NBA). To address NBA, we introduce Positive--Direction Matching (PDM), a branch-aware OPD objective that separately constrains the positive prediction and the CFG conditional direction. We apply PDM to dense-to-sparse video control, where naive guided matching is highly sensitive to inference guidance scales, while branch-aware supervision enables more robust and effective knowledge transfer.

KANEx: Translating Kolmogorov-Arnold Networks' Interpretability to Medical Explainability cs.CV

Computer vision models have become highly effective for medical applications, yet their black-box nature continues to undermine clinician trust. In clinical workflows, chest X-ray classifiers are increasingly paired with Vision-Language Models (VLMs) to generate natural-language explanations. However, these systems add linguistic fluency without addressing the underlying opacity of the visual model. With the emergence of Kolmogorov-Arnold Networks (KANs), whose spline-based components provide inherently interpretable functional units, we investigate whether this architectural transparency can be leveraged to produce more trustworthy textual explanations. We introduce KANEx, the first ever framework that leverages the symbolic transparency of KANs to ground VLM reasoning. This interpretability also made it possible to design KAN-Map, a novel heatmap generation method derived directly from KAN models rather than gradient approximations. We feed these grounded contexts into downstream VLMs for enhanced explainability. Benchmarked on the MIMIC-CXR dataset, we demonstrate that KAN-based architectures with ResNet/ViT baselines demonstrate improved semantic similarity while producing significantly more faithful saliency maps. KAN architectures improve visual localization and downstream reasoning quality by 10%. Our findings suggest that grounding linguistic explanations and visual attributions in mathematically interpretable units is a necessary step toward trustworthy medical AI.

Global Convergence of DGM and PINN Algorithms for Solving Nonlinear PDEs cs.LG

The Deep Galerkin Method (DGM) and Physics Informed Neural Networks (PINNs) have become widely-used methods for solving partial differential equations (PDEs) in the rapidly growing field of scientific machine learning. In these methods, a neural network is trained to approximate the PDE solution by using (stochastic) gradient descent to minimize the PDE residual of the neural network. Due to the non-convexity of the PDE residual objective function, the trained neural network may, in principle, only converge to a local minimizer of the objective function (which would not be a solution of the PDE). Therefore, there is a longstanding question regarding the mathematical foundations of these algorithms, and it is highly valuable to establish that the trained neural network will converge to the PDE solution. For a class of semi-linear PDEs (nonlinear in the solution and its first derivative), we prove that neural networks trained with gradient descent to minimize the PDE residual objective function will converge to the PDE solution.

BenchmarksFull tables
Artificial AnalysisIntelligence Index

Composite score across coding, math, and reasoning

#ModelScoretok/s$/1M
1Claude Opus 560.763$10.00
2Claude Fable 559.971$20.00
3GPT-5.6 Sol58.990$11.25
4Kimi K357.133$6.00
5Claude Opus 4.855.765$10.00
SWE-rebench

Agentic coding on real-world software engineering tasks

#ModelScore
1OpenAIgpt-5.5-2026-04-23-xhighModel62.7%± 0.91%
2JunieJunieAgent61.6%± 0.64%
3OpenAICodexAgent60.4%± 1.37%
4AnthropicClaude CodeAgent59.6%± 1.98%
5OpenAIgpt-5.5-2026-04-23-mediumModel58.9%± 0.78%