This is a summary of the book titled “AI Engineering” written by “Chip Huyen” and published by O’Reilly in 2025. AI Engineering is about applications not just models. We could learn how to develop models and navigate challenges that might arise during the process, but we must also learn how to adapt a model to a specific need especially when there are choices of models available for download from those skilled at building these. Datasets are another area of emphasis because most models are as good as the data that they operate on. These are some ways in which AI engineering differs from machine learning engineering. AI models require both instructions and information. Enhancing instructions requires “prompt engineering” and enhancing information requires “retrieval-augmented generation” and “agents”. Prompt engineering is human-to-AI communication that is most effective for certain types of tasks. Retrieval-augmented generation aka RAG is primarily used for constructing contexts. Autonomous agents are more versatile. These enhancements reduce errors from “bias” and “hallucinations” which result from incomplete or inaccurate responses. 

AI engineering is a rapidly growing field that focuses on building applications on top of readily available models. Applications like ChatGPT and Google's Gemini and Midjourney require significant amounts of data and electricity to make them powerful and efficient. AI engineering has become one of the fastest-growing engineering disciplines, as demand for AI applications has increased while the barrier to entry for building AI applications has decreased. Training large language model (LLM) AIs requires huge amounts of data and computational power, and self-supervision allows models to infer how to label data based on input data. Foundation AI models, which are trained on enormous amounts of data, can handle a wide range of tasks, such as generating product descriptions or refining descriptions based on customer reviews. AI engineering involves developing applications on top of these foundation models, which are versatile and attract billions in investment. However, evaluating an AI model is challenging, and training foundation models is a complex and expensive endeavor. 

AI models are only as good as the data they were trained on. Poor data quality, such as misinformation and conspiracy theories, can lead to questionable outputs. Training data is limited in language terms, with English being the most common language. Many languages are not even included in the data, making some models more likely to have performance problems when operating in non-English languages. To choose the right foundation model, evaluate applications and determine how to measure their success. Assessing an application's effectiveness in domain-specific capability, generation capability, instruction-following capability, and cost and latency is crucial. Evaluating the moral or ethical status of an application is also important. Finally, there must be distinction between what is wanted and what is needed when assessing models. 

Prompt engineering is the process of creating instructions to achieve desired outputs from an AI model. It involves giving instructions to the model to elicit desired outputs, which can be optimized through statistics and practices like dataset curation. A good prompt should have three features: a broad description of the desired output, relevant examples, and a task to examine a specific text and extract all instances of that type of language. The amount of prompt engineering needed depends on the model's quality and robustness. Context and context length are crucial, with the space available for context length increasing dramatically in recent years. However, good prompt engineering practices are still essential for complex outputs. AI models require instructions and adequate contextual information to complete tasks. Context can be built through retrieval-augmented generation (RAG) and agents, with RAG facilitating information retrieval from independent data sources and agents enabling internet searches for relevant information. 

RAG and agentic patterns are powerful AI models that have captured the collective imagination, leading to incredible demos and products. RAG accesses relevant information from various sources, allowing for detailed and informed query responses and reducing hallucinations. Agents, or intelligent agents, are AI's ultimate aim and can perceive and interact with their environment. RAG and agent systems require prompts and vast amounts of information, sometimes overwhelming a system's memory capacity. However, models can be adapted for specific tasks or industries through additional training. Fine-tuning can enhance domain-specific capabilities and strengthen safety. Customized foundation models often require more up-front investment due to memory demands. Parameter-efficient fine-tuning (PEFT) is a popular method to optimize memory. Transfer learning is an important concept in adapting foundation models in memory-efficient ways, allowing models to learn and be customized with fewer examples, leveraging a good base model. 

A model's performance relies on its training data, and dataset engineering aims to create a customized model within budget constraints. As models become more complex, investment in data and skilled personnel is increasing. AI is becoming more data-centric, focusing on improving performance by enhancing data processing techniques and creating high-quality datasets. Quality data enhances model performance, speed, and contexts, while low-quality data increases errors and biases. Data selection should involve understanding the model's workings and working closely with model and application developers. Minimal amounts of high-quality data are better than massive amounts.