What is Generative AI and How Does it Work?

Learn how generative AI is revolutionizing industries by creating new data that mimics the underlying patterns and structures of existing data. Build your own generative AI models with free cloud compute and resources on Saturn Cloud. Automate tasks, create novel solutions, and inspire innovation in your industry with generative AI.

Credit: Midjourney

What Is Generative AI

Generative AI refers to a class of artificial intelligence algorithms that can generate new and unique data, rather than simply making decisions based on existing data. It is a rapidly growing field within artificial intelligence, focusing on creating new data that mimics the underlying patterns and structures of existing data.

How Does Generative AI Work

Generative AI works by using deep learning models to generate new and original content, such as text, images, or music, based on patterns and insights learned from training data.

Key Concepts and Techniques

A. Generative models vs. discriminative models


Generative models and discriminative models are two fundamental types of machine learning models, each with distinct characteristics and objectives. Generative models aim to learn the joint probability distribution of input data and their corresponding labels, allowing them to generate new data samples. On the other hand, discriminative models focus on learning the conditional probability distribution of labels given the input data, primarily for tasks like classification and regression.

Differences and use cases

The main difference between generative and discriminative models lies in their approach to modeling data. While generative models capture the underlying structure of the data to create new samples, discriminative models concentrate on finding boundaries that distinguish different classes or labels. As a result, generative models are well-suited for tasks like data generation, unsupervised learning, and density estimation. Discriminative models, in contrast, excel at supervised learning tasks such as classification and regression.

Although both types of models have their strengths, generative models are particularly valuable for applications where data generation or uncovering hidden patterns is essential. In some cases, combining generative and discriminative models can yield improved performance by leveraging the strengths of both approaches.

Variational Autoencoders (VAEs)

Variational Autoencoders are a class of generative models that use neural networks to learn the underlying distribution of data. A VAE consists of two primary components: an encoder and a decoder. The encoder maps the input data into a latent space by learning a set of parameters (mean and variance) for a Gaussian distribution. The decoder then samples from this distribution and reconstructs the input data.

VAEs are trained by optimizing a combination of reconstruction loss and a regularization term called the Kullback-Leibler (KL) divergence. The reconstruction loss encourages the model to produce accurate reconstructions of the input data, while the KL divergence ensures that the latent space is well-structured and continuous. This allows VAEs to generate new samples by sampling from the latent space and passing them through the decoder.

Generative Adversarial Networks (GANs)

Generative Adversarial Networks are a powerful class of generative models that consist of two neural networks, a generator, and a discriminator, which compete against each other in a game-theoretic framework. The generator creates new data samples, while the discriminator attempts to distinguish between real samples from the training data and fake samples produced by the generator.

During training, the generator aims to improve its ability to create realistic samples, and the discriminator works on accurately classifying real and fake data. This adversarial process continues until an equilibrium is reached, where the generator produces samples that the discriminator cannot differentiate from the real data. GANs have gained popularity due to their ability to generate high-quality and diverse samples, especially in the field of computer vision.

Transformer-based models (e.g., GPT series)

Transformer-based models, such as the GPT series, are a family of generative models that have achieved state-of-the-art results in various natural language processing tasks. They employ self-attention mechanisms, which allow them to capture long-range dependencies and complex patterns in the data efficiently.

GPT, or Generative Pre-trained Transformer, models are trained in a two-step process: pre-training and fine-tuning. During pre-training, the model learns to predict the next word in a sequence by training on a large corpus of text. This unsupervised learning phase enables the model to capture the structure and semantics of the language. In the fine-tuning phase, the model is further trained on a specific task, such as text summarization or translation, using supervised learning.

Transformer-based models have demonstrated remarkable performance across a wide range of natural language processing tasks. Their ability to generate coherent and contextually relevant text has made them particularly valuable for applications such as chatbots, automated content generation, and code completion. Moreover, recent advances in scaling transformer models, such as the GPT series, have pushed the boundaries of generative AI, enabling more complex and creative text generation. These models have also been extended to other domains, including computer vision and reinforcement learning, highlighting their versatility and potential to revolutionize various aspects of AI.

How Generative AI works

A. Probability distributions and data generation

Generative AI models aim to learn the underlying probability distribution of the data they are trained on, allowing them to generate new samples that resemble the training data. The key idea is to capture the inherent structure and patterns in the input data by approximating the complex distribution that governs it. Once the model has learned this distribution, it can sample from it to create novel data points that share similar properties with the original data.

B. Training process and optimization

Loss functions and gradients

To train generative AI models, a suitable loss function is required to measure the discrepancy between the generated data and the real data. This loss function guides the optimization process, enabling the model to adjust its parameters to minimize the difference between the generated and real data distributions. Common loss functions include mean squared error, cross-entropy, and the Kullback-Leibler (KL) divergence. The choice of loss function depends on the specific model and task.

During training, gradients are computed with respect to the loss function using techniques like backpropagation, which allows the model to update its parameters. Optimizers, such as stochastic gradient descent (SGD) or adaptive variants like Adam, are then used to iteratively adjust the model’s parameters to minimize the loss.

Balancing generation quality and diversity

A critical aspect of training generative AI models is balancing the quality and diversity of the generated samples. High-quality samples closely resemble the real data, while diverse samples exhibit a wide range of characteristics found in the training data. Striking the right balance is essential to avoid overfitting, where the model generates samples that closely mimic the training data but lacks diversity, or underfitting, where the model generates diverse samples but fails to capture the essence of the real data.

C. Sampling and inference strategies

Temperature scaling

Temperature scaling is a technique used to control the randomness of the generated samples in generative AI models. By adjusting the temperature parameter, one can influence the model’s output distribution. Higher temperature values yield more diverse and random samples, while lower temperature values result in more deterministic and focused samples. Tuning the temperature allows for controlling the trade-off between sample quality and diversity.

Beam search is a search strategy commonly used in sequence generation tasks, such as machine translation and text summarization. It works by maintaining a fixed number of partially generated sequences (the “beam”) during the generation process. At each step, the model expands the sequences by adding new tokens, and only the top-scoring sequences are retained. This approach helps to find more optimal sequences while avoiding the computational burden of exploring the entire search space.

Top-k sampling

Top-k sampling is a sampling strategy that involves selecting the next token from a subset of the k most probable tokens at each step of the generation process. This method encourages diversity by allowing for a degree of randomness in the generation process, while still maintaining control over the quality of the generated samples. By adjusting the value of k, one can balance the trade-off between sample quality and diversity to suit the specific application.

In summary, generative AI models work by learning the probability distributions of input data, optimizing the model parameters using appropriate loss functions and gradients, and employing various sampling and inference strategies to control the quality and diversity of the generated outputs. By understanding these core concepts, one can harness the power of generative AI to create realistic and diverse samples for a wide range of applications.

Practical Applications of Generative AI

A. Natural Language Processing

Text generation and summarization: Generative AI models have shown remarkable capabilities in generating coherent and contextually relevant text, enabling applications such as automated content creation and summarization of long documents into concise versions.

Machine translation: Generative AI techniques have been applied to translate text between languages with high accuracy, overcoming challenges such as idiomatic expressions, complex grammar, and syntax variations.

B. Computer Vision

Image synthesis and inpainting: Generative AI models can synthesize realistic images, create new objects in existing scenes, or fill in missing parts of images with plausible content, enabling applications like image editing and virtual scene creation.

Style transfer: Generative AI techniques can be used to transfer the artistic style of one image to another, allowing users to create unique and visually appealing artwork by combining different styles and content.

C. Other domains

Drug discovery: Generative AI models can generate novel molecular structures with desired properties, accelerating the drug discovery process by reducing the time and resources required to identify potential drug candidates.

Music and art generation: Generative AI has been employed to create original music compositions and visual art by learning the underlying patterns and structures present in existing pieces, opening up new creative avenues for artists and musicians.


Generative AI encompasses a range of techniques and models that learn the underlying probability distributions of data, enabling the generation of new samples. Key concepts include generative models, training processes, and sampling strategies. Applications span diverse domains such as natural language processing, computer vision, drug discovery, and creative arts.

Future prospects for generative AI

Generative AI holds immense potential to revolutionize various industries by creating novel solutions, automating tasks, and inspiring innovation. As computational power and data availability continue to grow, so too will the capabilities and performance of generative models. Future research will likely focus on addressing challenges such as ethical considerations, reducing biases, and improving sample quality and diversity. As generative AI continues to advance, its impact on society and technology will only become more profound, shaping the future of AI and opening up new opportunities across numerous fields.

If you want to build your own generative AI models, sign up at Saturn Cloud to get started with free cloud compute and resources.

About Saturn Cloud

Saturn Cloud is your all-in-one solution for data science & ML development, deployment, and data pipelines in the cloud. Spin up a notebook with 4TB of RAM, add a GPU, connect to a distributed cluster of workers, and more. Request a demo today to learn more.