The fourth AI scaling wave addresses the fundamental limitation of all previous phases: AI systems are brilliant but amnesiac. They have no persistent state across sessions, no working memory that compounds over time. This phase represents a conceptual shift from models that process inputs to agents that maintain operational state.
Three architectural innovations define the fourth scaling phase:
1. Progressive Token Accumulation
Modern context windows of 200K+ tokens (approximately 150,000 words) enable what can be described as working memory – each turn building on previous context rather than starting fresh. The model maintains conversational coherence across extended interactions, preserving what matters for continuity.
2. Intelligent Token Management
The most architecturally significant innovation: extended thinking blocks can be automatically stripped from subsequent turns. This solves a critical efficiency problem – without automatic stripping, complex reasoning would exhaust the context window rapidly.
The system preserves what matters (conversation history, accumulated context) while discarding what doesn’t (intermediate reasoning chains). This is memory management at the architectural level.
3. State Continuity Infrastructure
For agentic workflows involving tool use, maintaining coherent state across tool-use cycles becomes non-trivial engineering. As agents become more autonomous, state continuity requires explicit architectural support.
Context Window Phase Transitions
Capability improvements aren’t linear – they’re step functions:
At 8K tokens: Basic conversation maintenance
At 32K tokens: Document-level understanding
At 128K tokens: Multi-document synthesis
At 200K+ tokens: Extended reasoning with tool integration
At 1M+ tokens: Entire knowledge domain integration
Key Takeaway
The companies building agentic AI systems must solve coherence elegantly. Breaking reasoning continuity during tool use undermines the entire system. State persistence is the new competitive battleground.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
