The artificial intelligence ("AI") industry just unveiled its newest class of models. But the industry's holy grail remains out of reach...
I'm talking about artificial general intelligence ("AGI").
AGI describes a computer model that understands, learns, and applies knowledge across a broad range of tasks, just like a human.
Last week, OpenAI debuted its newest AI chatbot, GPT-5. The new model represents a big leap forward in the field. But on Wednesday, OpenAI CEO Sam Altman hesitated to call it AGI...
This is clearly a model that is generally intelligent, although I think in the way that most of us define AGI, we're still missing something quite important, or many things quite important.
In other words, as impressive as AI is today, it's still a far cry from AGI.
But behind the scenes, a novel approach to AI innovation is taking shape. And it could bring the AGI dream closer than ever.
Let me explain...
Last week saw the release of not one but two new flagship AI models. Anthropic's Claude Opus 4.1 debuted on August 5, just two days before OpenAI's GPT-5.
These models represent the bleeding edge of consumer AI. But when you look at the data, they deliver only small performance improvements...
We can see this by comparing both models with their predecessors – Claude Opus 4 and OpenAI o3. We'll track improvement across four benchmarks: coding, graduate-level reasoning, visual reasoning, and high school math.
Take a look at how the new models performed at these tasks...
Both new models only slightly outperform their predecessors. GPT-5 made the larger leap of the two, improving its coding and high school math scores from OpenAI o3 by 6 percentage points each.
So while language models are undeniably getting better, progress is hard-fought.
However, a little-known innovation could pave the way for AGI-like breakthroughs. I'm talking about the new class of AI "world" models...
Virtual Worlds Are Powering the Next AI Leap
World models take a text prompt and generate a dynamic 3D world. It's a lot like a video game. These tools let AI agents train on things like physics in open-ended virtual environments.
In other words, AI world models closely mimic the mental development of children. They're a potential way to test things out and learn from experience. This could help AI agents achieve the "subconscious" reasoning that will characterize true AGI.
Last Tuesday, the Google DeepMind team announced Genie 3. This world model creates consistent digital environments that can last up to several minutes.
One of Genie 3's biggest improvements is its ability to trigger "events" – written changes to the virtual world that appear in real time. These events will train agents on how to deal with the unexpected...
In short, Genie 3 combines consistent virtual worlds with spontaneous prompting. This combination allows AI agents to execute long chains of actions in safe virtual spaces.
And again, this kind of training is a valuable step closer to AGI.
The race to AGI is a marathon, not a sprint. It could take years or even decades to get there...
But with innovations like world models, more sophisticated AI systems are a certainty.
And that's good news for AI investors... It means this bull market still isn't over.
The newest AI language models are smarter than ever – but there's still time to profit as companies race to achieve AGI. Semiconductors, data centers, and AI software companies are all great ways to gain exposure to this rally.
With world models coming to market, Silicon Valley's next push toward AGI is on...
Don't miss this once-in-a-lifetime innovation.
Good investing,
Sean Michael Cummings
Further Reading
In 2010, 10,000 bitcoin could have bought you two pizzas. And that transaction, later dubbed "bitcoin pizza day," set off a trillion-dollar crypto revolution – one that's now transforming industries, attracting institutions... and paving the way for bitcoin's next leg higher.
"Last summer, major chatbots couldn't count the number of r's in 'strawberry,'" Chris Igou writes. But last month, one Big Tech giant's chatbot won a gold medal in the "Olympics of math." And its growing presence in the AI market sparked a rare multiday rally that points to further upside ahead.
Market Notes
HIGHS AND LOWS
NEW HIGHS OF NOTE LAST WEEK
Deutsche Bank (DB)... financial services
UBS (UBS)... Swiss bank
CBOE Global Markets (CBOE)... exchange operator
Nasdaq (NDAQ)... stock exchanges
Robinhood Markets (HOOD)... stock-trading app
Cisco Systems (CSCO)... networking tech
Palantir Technologies (PLTR)... defense-software solutions
Johnson & Johnson (JNJ)... health titan
Dollar Tree (DLTR)... discount retail
Altria (MO)... cigarettes
Coeur Mining (CDE)... precious metals
Kinross Gold (KGC)... gold
Newmont (NEM)... gold
Pan American Silver (PAAS)... silver
NEW LOWS OF NOTE LAST WEEK
Accenture (ACN)... digital consulting
GoDaddy (GDDY)... website hosting
Haemonetics (HAE)... medical technology
Eli Lilly (LLY)... pharmaceuticals
Chipotle Mexican Grill (CMG)... tacos and burritos
Lululemon Athletica (LULU)... athleisure
