AI Pioneer Wants Europe to Forge Its Own Nimbler Way Forward

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(Bloomberg) — One belief underlying the power-hungry approach to machine learning advanced by OpenAI and Mistral AI is that an artificial intelligence model must review its entire dataset before spitting out new insights.

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Sepp Hochreiter, an early pioneer of the technology who runs an AI lab at Johannes Kepler University in Linz, Austria, has a different view, one that requires far less cash and computing power. He’s interested in teaching AI models how to efficiently forget.

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Hochreiter holds a special place in the world of artificial intelligence, having scaled the technology’s highest peaks long before most computer scientists. As a university student in Munich during 1990s he came up with the conceptual framework that underpinned the first generation of nimble AI models used by Alphabet, Apple and Amazon.

That approach, called Long Short-Term Memory, or LSTM, taught computers not only how to memorize complex data, but also which information to discard. After MIT Press published Hochreiter’s results, he became a star in tech circles and LSTM the industry standard.

Now, with concern rising about the vast amounts of energy needed to power AI — and Europe’s slow start in developing the technology — the 58-year-old scientist is back with a new AI model built on this approach.

In May, Hochreiter and his team of researchers released xLSTM, which he says is proving to be faster and more energy efficient than generative AI. To explain how it works, he invokes an older piece of information technology: the book.

Each time a reader picks up a novel and begins a new chapter, she doesn’t need to cycle through every previous word to know where the story left off. She’ll remember the plots, subplots, characters and themes, and discard what isn’t central to the story. Distinguishing what should be remembered from what can be forgotten is, Hochreiter believes, key to quick and efficient computation.

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It’s also why xLSTM doesn’t rely on $100 billion data centers that suck up and store everything. 

“It’s a lighter and faster model that consumes far less energy,” Hochreiter said.

While hyperscalers have long dominated the sector, the success of China’s DeepSeek earlier this year showed that an emphasis on efficiency may be of increasing interest to investors. The company started with only 10 million yuan ($1.4 million). Since then, other AI businesses have also embraced models that run on fewer chips. And even before that, there was a push to launch nimbler and more affordable small language models.

With the prospect of a US-Europe trade war looming and the need for technological sovereignty coming into focus, Hochreiter believes tailor-made AI is well-suited for Europe. “Everybody will be switching to new models better suited for purpose in the coming years,” he said. “It’s important that we consolidate in Europe around technologies, algorithms and methods in our possession.”

During an interview at his AI institute, some 150 kilometers (93 miles) east of the farm in Germany where he grew up, Hochreiter explained that he sees more value in working with private manufacturing and trade data than with large-language datasets. “Language,” he said, “is not the core business of most companies.”

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Not everybody is convinced. While DeepSeek showed that small investments can yield big market disruptions, Hochreiter still needs to prove he can scale his technology. Computer scientists who have reviewed Hochreiter’s strategy note that the models he’s trained are much smaller than ChatGPT. Some question whether xLSTM will be able to scale, and if it can retain its assumed computational efficiency when applied to bigger data sets that require more processing power. 

Those questions may be answered as Hochreiter and his team take their work into the corporate world.

In the last year, his lab has spun off two companies that are now working with European producers of robots, drones and power-grid gear. The first, NXAI GmbH, where Hochreiter acts as chief scientist, raised about €20 million ($22 million) in a funding round led by Austrian industrialist Stefan Pierer. The second, Emmi AI GmbH, run by former Microsoft researcher Johannes Brandstetter, began business operations this month.

NXAI isn’t looking for venture-capital funding – instead, it’s courting companies to take stakes in industry-specific vertical AI models in sectors such as automotive, biotech and robotics. “Right now, there’s a return-on-investment problem in AI,” said NXAI Chief Executive Officer Albert Ortig. “We want to create something with staying power that isn’t sold off for a billion euros after a few years.”

At his lab just off the shore of the Danube River, Hochreiter is confident that he’s on the right track.

“We’ve made something better,” he said.

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