Are you quietly burning multi‐million dollars a year on LLM inference while latency kills real‐time use cases? In the past 14 days (FinOps reports from 2025‐11–2025‐12), distillation, quantization, and edge NPUs have converged to make “right‐sized AI” the new priority — this summary tells you what that means and what to do. Big models (70B+) stay for research and synthetic data; teams are compressing them (7B→3B, 13B→1–2B) and keeping 90–95% task performance while slashing cost and latency. Quantization (int8/int4, GGUF) and device NPUs mean 1–3B‐parameter models can hit sub‐100 ms on phones and laptops. Impact: lower inference cost, on‐device privacy for trading and medical apps, and a shift to fleets of specialist models. Immediate moves: set latency/energy constraints, treat small models like APIs, harden evaluation and SBOMs, and close the distill→deploy→monitor loop.

Cloud inference bills and GPU scarcity are squeezing margins — want a cheaper, faster alternative? Over the past two weeks research releases, open‐source projects, and hardware roadmaps have pushed the industrialization of distilled, on‐device and domain‐specific AI. Large teachers (100B+ params) are being compressed into student models (often 1–3B) via int8/int4/binary quantization and pruning to meet targets like <50 ms latency and <1 GB RAM, running on NPUs and compact accelerators (tens of TOPS). That matters for fintech, trading, biotech, devices, and developer tooling: lower latency, better privacy, easier regulatory proofs, and offline operation. Immediate actions: build distillation + evaluation pipelines, adopt model catalogs and governance, and treat model SBOMs as security hygiene. Watch for risks: harder benchmarking, fragmentation, and supply‐chain tampering. Mastering this will be a 2–3 year competitive edge.

On 2025-07-01 the U.S. Senate voted 99–1 to remove a proposed 10-year moratorium on state AI regulation from a major tax and spending bill, preserving states’ ability to pass and enforce AI-specific laws after a revised funding-limitation version also failed; that decision sustains regulatory uncertainty and keeps states functioning as policy “laboratories” (e.g., California’s SB-243 and state deepfake/impersonation laws). The outcome matters for customers, revenue and operations because fragmented state rules will shape product requirements, compliance costs, liability and market access across AI, software engineering, fintech, biotech and quantum applications. Immediate priorities: monitor federal bills and state law developments, track standards and agency rulemaking (FTC, FCC, ISO/NIST/IEEE), build compliance and auditability capabilities, design flexible architectures, and engage regulators and public comment processes.