Large language models are now central to artificial intelligence because they can understand natural language and generate text with high accuracy. They use transformer architecture and deep learning to process large amounts of training data and learn patterns in human language.
Their usefulness spans many tasks, from answering questions to analysing documents. However, effective adoption depends on data quality, computational resources, and careful evaluation.
Discover large language models, how they work, use cases and capabilities, and their challenges.
What are large language models?
The table above shows the leading large language models (LLMs). You can hover over each model name to see how it performed on popular benchmarks and in real-world latency tests, and compare its pricing with other models.
A large language model is a machine learning model designed to understand natural language and generate text in response to user inputs. These models rely on neural networks, particularly transformer models, to learn statistical relationships in sequential data. A transformer architecture uses a self-attention mechanism to capture long-range dependencies in input text, enabling the model to interpret context and produce coherent model outputs.
Many large language models belong to a broader class of foundation models. A foundation model is trained on extensive datasets using unsupervised learning or semi-supervised learning and can be fine-tuned for specific tasks.
Large language models are a prominent example of foundation models as they can perform language modeling, language translation, sentiment analysis, text generation, and other tasks with minimal task-specific training.
Because of their scale, these AI models often contain billions or even hundreds of billions of parameters. Larger models generally learn richer language patterns, though very large models also require significant computational resources for both training and inference.
How large language models work
Understanding how large language models work requires examining their learning process and internal mechanisms. The typical workflow includes data collection, pretraining, fine-tuning, and deployment.
Pretraining on large datasets
During pretraining, a language model learns to predict the next token in a sequence of input text. By processing large volumes of training data, the model learns how human language is structured. This process allows the model to develop in-context learning behaviors, including zero-shot learning and few-shot learning, to answer questions and perform other tasks without task-specific training.
The transformer architecture
Transformer models work by applying a self-attention mechanism to every token in the sequence. Instead of processing text sequentially, as earlier neural network architectures did, transformer models analyze all tokens in parallel and learn which parts of the sequence are most relevant. This ability to capture long-range dependencies is essential for handling detailed queries, technical documents, and complex problem-solving.
A transformer model consists of multiple attention layers, feedforward networks, and normalization components. Increasing the number of layers typically improves model performance but also increases computational requirements.
Fine-tuning for specific tasks
After pretraining, a model may be fine-tuned on curated datasets for applications such as answering questions, generating responses, translating languages, or generating code in various programming languages.
Fine-tuned models are particularly effective for domain-specific tasks where accuracy and terminology matter. In addition, modern systems often combine large language models with retrieval-augmented generation, so that model outputs are grounded in enterprise data rather than general web text.
Capabilities of large language models
Text generation and summarization
A language model can generate text that follows grammatical structure and reflects the context provided in user inputs. It can summarize long documents, restructure information, and respond to open-ended questions.
Language translation and multilingual tasks
Modern models handle translating languages with high accuracy. Many are trained on multilingual datasets and can switch between languages in a single interaction.
Information retrieval and question answering
Using retrieval augmented generation, an AI system can combine model outputs with retrieved documents. This approach improves factual accuracy compared to relying solely on a model’s internal knowledge.
Code generation
Some generative AI models produce generated code-based responses in many programming languages. Training models on code datasets improves their ability to write, debug, or explain code.
Classification and analysis
Tasks such as sentiment analysis, text classification, and data extraction are well-suited for large language models because they rely on learned statistical patterns in text.
Multimodal extensions
A multimodal model uses both language and visual inputs. Such models process images, charts, and diagrams along with text. Multimodal models extend the transformer architecture by sharing neural network components across multiple modalities.
Architectural considerations
Designing and deploying large language models involves trade-offs among size, performance, cost, and reliability. Organisations need to consider several aspects of architecture and deployment.
Model size and efficiency
Larger models typically achieve higher accuracy, but they increase memory usage and inference time. Smaller or domain-specific models may be more practical when latency or resource limits matter. Model weights, precision formats, and quantization strategies influence performance on edge devices and enterprise servers.
Training data quality
The breadth and quality of training data determine how well a model generalizes. Synthetic data can enhance training for rare patterns, but models trained on low-quality datasets may produce unreliable outputs.
Inference latency and cost
Operational demands depend on computational resources. Larger models require more memory and processing power, which influences cost per request. Enterprises must evaluate model performance relative to cost when selecting AI models for production.
Safety, governance, and monitoring
Generative AI systems can produce incorrect or biased outputs. Governance measures such as output monitoring, guardrails, version control, and evaluation pipelines help mitigate risks. Reliability assessments should be continuous to identify drift in model behavior.
Challenges and limitations of language models
Hallucinations
LLMs can produce incorrect or fabricated information because they rely on patterns in text rather than verified facts. This makes them prone to confident but misleading statements.
It becomes difficult to use them safely in tasks that require factual accuracy, a central limitation when applying them to research, analysis, or decision support.
Lack of real understanding
LLMs do not understand concepts in the same way humans do. They work by predicting likely word sequences rather than interpreting meaning. This leads to gaps in reasoning, inconsistent logic, and errors in tasks that require comprehension beyond text correlations.
Bias and fairness issues
Because LLMs learn from large datasets that contain social and cultural biases, they sometimes reproduce or amplify those patterns. This can result in unfair or inappropriate outputs when dealing with sensitive topics such as gender, ethnicity, or politics.
Context window
Each large language model has a memory limit called a context window, which determines how many tokens (words, punctuation, etc.) it can process at once. Early models like GPT‑3 had limits as low as 2,048 tokens, roughly 1,500 words, meaning they couldn’t fully handle longer documents or conversations.
Recent advances have introduced long-context LLMs capable of processing vastly more information. Two leading examples are shown below:
- Qwen3‑32B is an open-source model that supports private deployment and performs well on reasoning and coding tasks, with a lower output cost that suits content-heavy use cases.
- Flash‑Lite, on the other hand, excels in handling massive inputs like books or transcripts, prioritizes speed, and lets users toggle “thinking mode” for added accuracy when needed.
High computational cost
Training and running LLMs requires significant computing power and energy. This makes development expensive and limits access for smaller organizations.
The resource demand also affects deployment when responses need to be generated at scale.
Data privacy and security risks
LLMs may expose private information if the training data is not adequately controlled. They can also be vulnerable to prompt manipulation, leading them to output unintended content. These issues create compliance and security concerns for organizations.
Interpretability challenges
The internal processes of LLMs are not easy to examine, and it is often unclear why a specific answer was generated. This lack of transparency makes debugging difficult and complicates use in environments that require clear explanations.
Limited real-time knowledge
Most LLMs do not have constant access to current information and rely on training data that ages over time. Without external tools or updates, they may provide outdated answers on market trends or regulatory changes.
Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE and NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and resources that referenced AIMultiple.
Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised enterprises on their technology decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.
He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.
Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.
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