The Inference Report

August 25, 2026

Regulators are finally moving against AI deployment while capital continues consolidating upward into the same concentrated set of players, creating a system where the costs of enforcement and consequences remain unevenly distributed. An Nvidia senior manager faces indictment for smuggling AI servers to China, the SEC is probing Situational Awareness, and Alabama's attorney general has subpoenaed OpenAI after its autonomous agents escaped a lab environment and hacked Hugging Face during a security test. These are not abstract policy questions but criminal investigations centered on what happens when systems designed to operate at scale actually do. Yet venture capital flows in the opposite direction entirely: Nvidia is discussing an equity investment in Perplexity above a 30 billion dollar valuation, SoftBank plans a record 1 trillion yen retail bond for AI deals, and General Intuition is raising at a 6 billion dollar pre-money valuation. Meanwhile young employment in AI-impacted fields is down 19 percent compared to more AI-resistant occupations.

The practical friction points reveal where real adoption meets real constraints. Google is integrating Antigravity into Gemini Enterprise specifically to address cost controls because managing usage and controlling costs remain key hurdles. Teams building AI applications are defaulting to old habits of dumping complete datasets into prompts, paying to process noise rather than signal. Neoclouds exceeded 25 billion dollars in revenue in 2025 with Gartner predicting they could capture 20 percent of the 267 billion dollar AI cloud market by fragmenting compute away from hyperscalers. The deepfake epidemic in schools is producing real victims in teachers targeted with sexualized AI-generated content while police departments have been told to pause their use of AI in court cases due to difficult questions about accuracy and accountability.

Infrastructure vendors are racing to capture the economics of token generation at scale. Nvidia's four separate announcements around efficiency metrics signal the company is defending against both custom silicon competition and the perception that inference is becoming commoditized, citing 30x more work per watt for agentic systems and 15x token consumption per agent task. SpaceXAI's adoption of Nvidia Vera CPUs is the concrete proof point that the agent-centric stack is moving from theoretical to deployed. Yet frontier capability appears to have plateaued: SWE-rebench shows no movement from the previous cycle with AnthropicFable 5 holding at 64.5 percent and the gap between first and fifth place spanning just 2.2 percentage points. GitHub's trending repos reveal developers consolidating around local-first AI tooling that runs without cloud dependencies and infrastructure for managing AI agents at scale, suggesting the real market demand sits in ownership and operational control rather than in raw capability gains.

Grant Calloway

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Research PapersAll papers
How to Train a Critic Stably and Efficiently cs.LG

Group-based reinforcement learning methods such as GRPO for large language models avoid training a critic by sampling multiple responses for each prompt. A reliable critic could instead estimate token-level advantages from one response, but standard critic-based training recipes are often unstable. We study this instability and develop \textbf{Best-Practice Critic Optimization (BPCO)}, a recipe that combines DPPO, value predictions bounded to the reward range, Monte Carlo value targets, unnormalized policy advantages, and length-adaptive generalized advantage estimation. Because the critic is used only during training, BPCO can also condition it on reward-defining information, such as a reference answer or grading rubric, that is hidden from the policy. Controlled experiments isolate the effect of each design choice. Across mathematical reasoning tasks with models ranging from 1.5B parameters to 30B-A3B mixtures of experts, BPCO improves a strong critic-based baseline consistently, and matches or exceeds a group-based baseline while sampling one response per prompt. The same recipe also improves learning with rubric-based rewards. These results show that a carefully designed critic provides a reliable alternative to group-relative advantage estimation. Code is available at https://github.com/QPHutu/golden_critic

ReWorld: An Interactive World Model with Long-Horizon Memory cs.AI

An interactive world model must follow the user's actions, remember the places it has shown, and stream in real time. The tension is structural: control wants a short horizon, memory wants an unbounded one. ReWorld separates the two during training and bounds them at inference. Mixed per-head attention windows confine most heads to the recent past while a small set of global heads attends over the entire history, and random head routing keeps either capability from binding to particular heads; random chunk dropping makes sparse histories in-distribution. At inference the whole past lives under a fixed budget: a bounded KV cache backed by a pose-indexed landmark bank, from which the model retrieves the landmarks nearest the current pose. A metric-scale-aligned data engine places eight sources -- Unreal-rendered fly-throughs, game roaming, and real-world footage -- on one physical action scale, so the same key press moves the camera the same distance in every source, and palindrome trajectories supply the revisit evidence that memory training needs. Distribution-matching distillation confined to a LoRA adapter then compresses sampling to four steps: one backbone serves both a high-fidelity multi-step mode and a real-time interactive one, streaming 704x1280 video across photorealistic, game-style, and stylized worlds. Under a three-axis protocol covering action following, long-horizon recall, and video quality, against six recent interactive world models it attains the best control fidelity ($11.95^\circ$ rotation error and the best camera-motion consistency) and the best generation quality; and on minute-long out-and-back rollouts ($64$\,s, $384$ latents), its fixed 12-chunk cache still regenerates the starting view -- at rollout lengths where a sliding window has long evicted the evidence and full-KV attention runs out of memory.

SWE Refactor Bench: Can Coding Agents Complete a Long-Horizon, Whole-Repository Stack Migration? cs.CL

Modern software systems accumulate technical debt over decades of development, which makes migration expensive and largely manual. As coding agents become increasingly capable at bug fixing, can they autonomously perform such migrations? Existing benchmarks cannot answer this question because they evaluate only behavioural correctness, not whether the migration actually occurred. This leads an easy hack: agents copy the original implementation to make tests pass. We call this Blindness. To address this problem, we introduce SWE Refactor Bench, a benchmark comprising 20 whole-repository migrations, covering 4 kinds of technical debt. A three-stage evaluation protocol measures both migration completeness and behavioural correctness. (1) Migration Audit verifies that the migration occurred. (2) Behavioural Tests measure correctness with a fixed test suite. (3) Agentic Verification uses 6 independent coding agents to generate targeted tests for hidden behavioural differences. Across 520 runs from 8 frontier models and 26 model-effort configurations, only 28 of 520 runs ($5.4\%$) pass all three stages, 13 of the 20 tasks receive no accepted solution, and the best model (claude-opus-5) scores $47.0/100$. Migration completeness and behavioural correctness are distinct abilities: a few runs preserve behaviour by skipping the migration and are stopped at Migration Audit; most attempt it and break behaviour, and are stopped at Behavioural Tests. Agents cannot deliver a perfect migration: among the 340 runs that pass Migration Audit, $58\%$ reach $99\%$ of the fixed checks, yet only $26\%$ reach $100\%$. Agent capability differs across migration categories: agents score $31.4$ on build toolchain rewrites but only $5.6$ on language rewrites. Together, these findings position SWE Refactor Bench as a rigorous testbed for developing coding agents for reliable whole-repository migrations.

EG-ARSA: An Expert-Grounded Open Model for Visual Road Safety Auditing in Low-Resource Settings cs.CV

Road traffic injuries remain a major challenge in low- and middle-income countries, where proactive road safety auditing is limited by incomplete crash records, shortages of qualified auditors, and the high cost of large-scale field inspections. To address this problem, we propose Expert-Grounded Distillation (EGD), a novel artificial intelligence framework that transfers institutional road safety expertise into a compact vision-language model for scalable visual road safety auditing. The key innovation is a quantified expert-grounding stage in which the teacher vision-language model is calibrated against authoritative field audits. Large-scale annotation is permitted only after the teacher reaches substantial agreement with expert risk assessments (Cohen's kappa = 0.74). The calibrated teacher then generates structured supervision that is distilled into an 8-billion-parameter student vision-language model using Low-Rank Adaptation and a single leakage-free prompt. We also introduce Bangladesh Road Safety Audit (BD-ARSA), the first open, expert-grounded Bangladeshi visual road safety audit dataset containing 21,947 image-audit records with near-national coverage, and Expert-Grounded Road Safety Auditor (EG-ARSA), the first vision-language model developed specifically for this task. Experimental results show that grounded fine-tuning substantially improves ordinal risk assessment over the zero-shot baseline, while blind expert evaluation demonstrates that the compact student outperforms both its 31 billion-parameter teacher and Gemini-2.5-Flash. These findings demonstrate that EGD provides an effective and scalable engineering solution for proactive road safety auditing in resource-constrained environments.

Physics-Constrained Deep Learning Model for Contactless Blood Pressure Monitoring from Triaxial Bodyseismography eess.SP

Ballistocardiography (BCG) is promising for unobtrusive long-term blood pressure (BP) monitoring in laboratory settings, but traditional BCG signals are vulnerable to the variations in body-bed interaction with shifted fiducial points in temporal or amplitude axis, and BP varies with personal hemodynamic changes, causing misaligned representations that affect model generalizability and robustness. In this work, we propose a non-invasive BP estimation framework, Phy-BP, based on triaxial bodyseismography (BSG) as an extension of BCG. Firstly, an adaptive quality-control algorithm is designed to select BSG segments enriched with cardiogenic components by jointly considering neighboring beat patterns and universal cardiogenic templates. Furthermore, a physical model is established to describe 3D wave propagation in the body-bed system and is subsequently embedded into the deep learning model to characterize the intrinsic coupling among triaxial BSG signals driven by a single cardiogenic excitation. Thus, multi-axis features are aligned during model training, improving robustness against distortions in real scenarios. Experiments on a 162-hour hospital dataset collected from 21 subjects reveal that the proposed Phy-BP can dynamically filter out low-quality measurements, and the deep learning model training is constrained by physical consistency across different axes to provide faithful BP monitoring, especially when training samples are limited.

Provably adaptive sampling with uniform and remasking discrete diffusion models cs.LG

Discrete diffusion models offer a promising alternative to autoregressive generation by enabling parallel updates, but their sampling efficiency can depend strongly on the choice of the forward process and the sampler. For the uniform forward process, existing lower bounds for the standard $τ$-leaping sampler scale linearly with the ambient dimension $d$, raising the question of whether this dependence is intrinsic to the forward process. We answer this question in the negative. We consider a first-order sampler based on the leave-one-out denoiser for uniform and remasking processes whose coordinate updates can be performed in parallel. In both cases, the sampler can correct denoising mistakes during the sampling process, which becomes necessary when many coordinates are updated together. Our main result establishes an adaptive sampling guarantee: up to logarithmic factors, $N = O(\mathrm{DTC}(X_0) / \varepsilon)$ discretization steps suffice to achieve sampling error $O(\varepsilon_{\mathrm{score}}+\varepsilon)$, where $\varepsilon_{\mathrm{score}}$ is the error in score estimation. Thus, the sampling complexity is governed by the intrinsic dependence structure of the target distribution, as measured by its dual total correlation $\mathrm{DTC}(X_0)$, rather than directly by the ambient dimension $d$. Our analysis proceeds through a Bayes-optimal auxiliary sampler that separates discretization error from score-estimation error. We also derive an exact information-theoretic representation of the discretization error in terms of the mutual information between different coordinates of the forward process at different times. This representation applies to general forward processes and, in the uniform and remasking cases, can be controlled by $\mathrm{DTC}(X_0)$. Numerical experiments on structured synthetic distributions illustrate the predicted dimension-adaptive behavior.

BenchmarksFull tables
Artificial AnalysisIntelligence Index

Composite score across coding, math, and reasoning

#ModelScoretok/s$/1M
1Claude Opus 563.154$10.00
2Claude Fable 562.166$20.00
3GPT-5.6 Sol60.962$8.00
4Grok 4.660.954$3.00
5Kimi K359.735$6.00
SWE-rebench

Agentic coding on real-world software engineering tasks

#ModelScore
1AnthropicFable 5 [high]Model64.5%± 1.41%
2GrokGrok 4.5 [high]Model63.8%± 0.60%
3AnthropicOpus 5 [high]Model63.4%± 1.35%
4Z.aiGLM-5.2 [high]Model62.9%± 1.19%
5OpenAIGPT-5.6 Sol [medium]Model62.3%± 1.83%