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Foundation Models Explained: Everything You Need to Know in 2023

In 2023, foundation models have taken center stage in conversations, signifying a significant transformation in the field of machine learning approaches. Gain insights into their functioning, practical applications, constraints, and the hurdles involved in adopting them to your specific use case.

Deval Shah
December 21, 2023
September 7, 2023
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In-context learning

As users increasingly rely on Large Language Models (LLMs) to accomplish their daily tasks, their concerns about the potential leakage of private data by these models have surged.

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This year, foundation models are at the forefront of discussions, representing a paradigm shift in machine learning methodologies. These models, often characterized by their extensive training data and intricate model architectures, serve as a foundational layer upon which specialized applications are built. Their emergence can be attributed to the advancements in deep learning techniques and the increasing availability of vast datasets.

Unlike traditional models, often constrained by their specificity, foundation models offer a more generalized approach. Once trained, they can be fine-tuned to cater to myriad applications, from chatbot virtual assistants to drug discovery, without extensive retraining. This versatility, combined with their robustness, positions foundation models as a linchpin in the AI systems of the future.

This article will explore the intricacies, applications, and implications of foundation models in the contemporary AI landscape.


  1. What are foundation models
  2. Foundation models examples
  3. 11 Real-world applications of foundation models
  4. Business applications of foundation models
  5. Challenges of Foundation Models Adoption
  6. Foundation models: Key research
  7. Foundation models: What’s next

What are foundation models?

Foundation models are large-scale AI architectures characterized by their expansive parameter scale and multi-modal adaptability. Primarily utilized in generative AI domains, these models excel in synthesizing high-fidelity text, images, videos, speech, and other media outputs. Often, the term is used interchangeably with 'GPAI', denoting their foundational role in the broader AI ecosystem.

But what exactly are they, and how do they function?

A Brief History of Foundation Models

The inception of foundation models can be traced back to the evolution of large-scale machine-learning models. Unlike traditional AI models trained for specific tasks, foundation models are trained on expansive datasets, enabling them to be fine-tuned for a myriad of applications and downstream tasks.

For instance, models like GPT-4, Dall-E 2, and BERT are all considered foundation models. The term "foundation model" was popularized in a 2021 paper by the Stanford Center for Research on Foundation Models and the Stanford Institute for Human-Centered Artificial Intelligence (HAI).

Figure: History of foundational models

**💡 Pro tip: Are you curious about the intricacies of how foundation models like GPT-3 and BERT operate? Dive deeper into the mechanics with our detailed guide on Prompt Injection at Lakera Insights.**

How Do Foundation Models Generate Responses?

At their core, foundation models are deep learning algorithms pre-trained on vast datasets, often sourced from the public internet. This pre-training allows them to transfer knowledge across different tasks.

For example, a foundation model trained on a broad corpus of data can be adapted to tasks ranging from natural language processing (NLP) to image recognition.

Figure: How foundational models generate responses (Image by author)

Two significant trends have been observed in the development and application of these models:

1. Homogenization: This refers to the phenomenon where a handful of deep learning architectures are employed to achieve top-tier results across various tasks.3 It's observed that many state-of-the-art NLP models are adaptations of a few foundational models

2. Emergence: This concept highlights that AI models can exhibit behaviors not explicitly intended during training. Depending on the context, such emergent behaviors can be beneficial and detrimental.

Foundation models serve as a base, a starting point. More specific models can be constructed from this foundation and tailored to particular tasks or industries. This adaptability, combined with the power of deep learning, makes foundation models a cornerstone in the modern AI landscape.

**💡 Pro tip: Want to learn more about ICL, in-context learning? Head over to Lakera's guide on the topic to learn what it is and how it works. Fine-tuning a model without fine-tuning?**

Foundation models examples


BERT, which stands for "Bidirectional Encoder Representations from Transformers," was one of the pioneering foundation models and predated the term "foundation model" by several years. It was introduced as an open-source model and was the first to be trained using only a plain-text corpus.

The primary innovation is its bidirectional nature, which allows it to understand the context of words in a sentence from both the left and the right side of a word. This bidirectional understanding significantly improved the model's performance on various NLP tasks.

BERT revolutionized the field of natural language processing by introducing bidirectional context to better understand the meaning of words in a sentence. It became a widely used pretraining model in NLP.

BERT has been instrumental in several NLP tasks, including sentiment analysis, predicting the next word in unfinished sentences, and more. Due to its versatility, it has been used as a foundation for many downstream NLP tasks and applications.

GitHub Link:


Figure: ChatGPT Prompt UI

ChatGPT was developed by OpenAI and is based on the GPT (Generative Pre-trained Transformer) architecture. It brought foundation models to the limelight by allowing anyone to interact with a large language model through an intuitive interface. The primary proposition of ChatGPT is to provide a user-friendly interface for interacting with large language models. It showcases the potential of foundation models in real-world applications, especially in chatbot-like scenarios.

ChatGPT introduced the concept of conversational continuity by maintaining a state that stretches back over multiple requests and responses. This made interactions with the model feel more like a continuous conversation.

ChatGPT has been used as a foundation for chatbots and virtual assistants. It has demonstrated its potential in various domains, from customer support to general knowledge queries.

Stable Diffusion

Stable Diffusion is a deep-learning, text-to-image model released in 2022. It leverages diffusion techniques to generate detailed images based on text descriptions. Beyond this primary application, it can also be used for tasks such as inpainting, outpainting, and generating image-to-image translations guided by a text prompt. The model was a collaborative effort developed by researchers from the CompVis Group at Ludwig Maximilian University of Munich and Runway, with a compute donation by Stability AI and training data sourced from non-profit organizations.

Stable Diffusion is a latent diffusion model, a deep generative artificial neural network. Unlike some of its predecessors, such as DALL-E and Midjourney, which were cloud-based, Stable Diffusion's code and model weights are publicly available. It can run on most consumer hardware with a modest GPU, marking a significant shift from proprietary text-to-image models.

Stable Diffusion has been applied in various domains, including but not limited to:

  • Generating detailed images from text descriptions.
  • Inpainting and outpainting tasks.
  • Image-to-image translations guided by text.
  • Data anonymization and augmentation.
  • Image upscaling and compression.

GitHub Link:

Figure: Stable Diffusion generated image


DALL-E (stylized as DALL·E) and DALL-E 2 are text-to-image models developed by OpenAI, designed to generate digital images from natural language descriptions, known as "prompts." The original DALL-E was introduced by OpenAI in a blog post in January 2021 and was based on a modified version of GPT-3 to produce images. In April 2022, OpenAI launched DALL-E 2, an enhanced version aimed at generating more realistic images at higher resolutions with the ability to "combine concepts, attributes, and styles."

Unlike Stable Diffusion, OpenAI has not publicly made either model's source code available. DALL-E 2 began its beta phase in July 2022, initially offering access to a select group of users due to ethical and safety concerns. However, by September 2022, it was made available to the general public. In November 2022, OpenAI released DALL-E 2 as an API, allowing developers to incorporate the model into their applications. Microsoft integrated DALL-E 2 into their Designer app and Image Creator tool available in Bing and Microsoft Edge.

DALL-E's technology is rooted in the generative pre-trained transformer (GPT) model, with DALL-E being a multimodal implementation of GPT-3 with 12 billion parameters. This model "swaps text for pixels" and is trained on text-image pairs sourced from the internet. DALL-E 2, on the other hand, utilizes 3.5 billion parameters, which is fewer than its predecessor. Additionally, DALL-E 2 employs a diffusion model conditioned on CLIP image embeddings.

Applications and capabilities of DALL-E include:

  • Generating images in various styles, such as photorealistic imagery, paintings, and emoji.
  • Manipulating and rearranging objects within images.
  • Producing images based on a wide range of arbitrary descriptions.
  • Demonstrating visual reasoning abilities, even to the extent of solving Raven's Matrices, a visual intelligence test.

There are ethical concerns surrounding DALL-E, especially regarding algorithmic bias and the potential misuse in creating deepfakes. There are also concerns about the impact of such models on the job market for artists and graphic designers.

GitHub Link: Not publicly available.

Figure: Prompt generated image by Dall-E

CLIP: Connecting Text and Images

Contrastive Language-Image Pre-Training is a neural network introduced by OpenAI that efficiently learns visual concepts from natural language supervision. Unlike traditional vision models trained on specific datasets and tasks, CLIP can be applied to any visual classification benchmark by simply providing the names of the visual categories to be recognized. This gives it "zero-shot" capabilities, similar to GPT-2 and GPT-3.

The model is trained on vast images with diverse natural language supervision available online. This design allows the network to perform various classification benchmarks without directly optimizing for the benchmark's performance. CLIP is about recognizing standard visual concepts and can be instructed in natural language to perform many classification tasks.

GitHub link:


ELECTRA is a novel pretraining approach introduced in the paper titled "ELECTRA: Pre-training Text Encoders as Discriminators Rather Than Generators." Unlike traditional masked language modeling (MLM) methods such as BERT, ELECTRA employs a unique strategy where two transformer models are trained simultaneously: a generator and a discriminator. The generator's task is to replace tokens in a sequence, functioning as a masked language model. In contrast, the discriminator's objective is to discern which tokens in the sequence were altered by the generator.

The primary innovation behind ELECTRA is the "replaced token detection" task. Instead of merely masking input tokens like in BERT, ELECTRA corrupts the input by substituting some tokens with plausible alternatives produced by a smaller generator network. The discriminator then tries to predict if the generator replaced each token in the corrupted sequence or remains original. This approach has proven more efficient than MLM, as it operates over all input tokens rather than just the masked subset. Consequently, ELECTRA's contextual representations have been shown to outperform BERT's when given the same model size, data, and compute resources.

ELECTRA has been designed primarily for pretraining, but its embeddings can be fine-tuned for various downstream NLP tasks, similar to other transformer models.

GitHub Link: ELECTRA on GitHub

HuggingFace Link: ELECTRA on Hugging Face

Numerous foundation models have emerged in recent times. A study systematically categorizes over 50 significant transformer models. The Stanford team evaluated 30 of these foundation models, highlighting the rapid evolution of the field, which led them to omit some of the latest and notable models.

11 Real-world applications of foundation models

Foundation models have revolutionized various real-world applications, showcasing their versatility and adaptability.

Content Generation and Marketing

  • Content Creation: They're adept at producing high-quality blogs, articles, and social media content.
  • Ad Copywriting: These models craft engaging ad copies for online campaigns.
  • Email Campaigns: They enhance email marketing by generating personalized content.

Customer Support and Communication

  • Chatbots: Powered by these models, chatbots can have natural, context-aware conversations with users.
  • Virtual Assistants: They offer personalized assistance, answering queries and performing tasks.

Translation and Localization

  • Language Translation: They enable seamless content translation, fostering global interactions.
  • Localization: These models adapt content for specific regions, ensuring cultural relevance.

Text Summarization

  • Article Summarization: They distill lengthy articles into concise summaries, simplifying content consumption.

Information Extraction

Foundation models excel in extracting specific data from vast text sources.

  • Named Entity Recognition (NER): They pinpoint names, organizations, and dates, streamlining data analysis and retrieval.

Market Intelligence and Sentiment Analysis

  • Sentiment Analysis: These models sift through customer feedback, reviews, and social media chatter to determine public sentiment toward products and brands.
  • Trend Analysis: They are adept at pinpointing emerging market trends and hot topics in discussions and news.

Legal and Compliance

  • Contract Analysis: They facilitate the extraction of crucial details from contracts and legal documents.
  • Regulatory Compliance: Foundation models simplify deciphering and comprehending intricate legal and regulatory texts.


Foundation models are making strides in healthcare, enhancing documentation and information retrieval.

  • Clinical Documentation: They streamline the creation of patient reports, summaries, and other medical documents.
  • Health Information Retrieval: These models excel in extracting pertinent medical data from extensive text databases.

Financial Analysis and Reporting

  • Financial Reports: They can distill financial reports, earnings calls, and market studies into succinct summaries.
  • News Analysis: Foundation models collate and scrutinize financial news, offering valuable insights to investors.

Education and E-Learning

  • Automated Tutoring: They offer explanations, solutions, and guidance on academic content.
  • Content Generation: These models can craft study resources, quizzes, and lesson outlines.

Creative Industries

  • Storytelling: They can weave narrative scripts and engage in creative writing for entertainment.

Visual Content Generation: Foundation models are venturing into generating visual content, adding another dimension to their capabilities.

Business applications of foundation models


CoPilot, developed by GitHub in collaboration with OpenAI, is an AI-powered code completion tool. It assists developers by suggesting whole lines or blocks of code as they type, making the coding process more efficient. CoPilot is trained on many public code repositories, enabling it to provide contextually relevant code suggestions for a wide range of programming languages and frameworks.

Dog and Boy

"Dog and Boy" is a Netflix original animated series that utilized foundation models for its scriptwriting process. By feeding the model with specific prompts and character backgrounds, the creators were able to generate unique dialogues and plot twists, showcasing the potential of AI in creative content generation.

Challenges of Foundation Models Adoption

The landscape of foundation models has been rapidly evolving, with advancements in machine learning and artificial intelligence driving their proliferation. As these models become more sophisticated and versatile, they are being integrated into many applications, from content generation to complex decision-making processes. According to ARK Invest, the adoption of foundation models is poised to create an astounding $80 trillion in enterprise value by 2030. To put this into perspective, this projection surpasses the $13 trillion in enterprise value generated by the Internet since 1997 by over six times.

However, while the potential of foundation models is undeniable, their adoption is challenging. Especially for enterprises, integrating these models into their operations presents a set of unique hurdles. Let's delve into the primary challenges faced by businesses in adopting foundation models:


The computational resources required to train and fine-tune foundation models are immense. Additionally, gaining access to vast data for training can be prohibitively expensive for many enterprises.

Privacy and Security

Foundation models often require large datasets, which may contain sensitive information. Ensuring the privacy of this data and securing the models against potential breaches or misuse is paramount.

Domain Adaptation

While foundation models are trained on diverse datasets, adapting them to specific industry domains or niche applications can be challenging, requiring additional fine-tuning and domain-specific data.

Legal and Ethical Considerations

Using foundation models can raise legal and ethical concerns, especially when decisions impact individuals' lives or rights. Ensuring compliance with regulations and ethical standards is crucial.

Dependency on Pretrained Models

Many enterprises rely heavily on pre-trained models, which might only sometimes align with their specific needs or the nuances of their data. This dependency can limit customization and adaptability.

Interpretability and Explainability

Understanding how foundation models arrive at specific decisions is essential for trust and accountability. However, the complexity of these models often makes them "black boxes" challenging to interpret or explain.

Integration and Maintenance

Integrating foundation models into existing IT infrastructures and ensuring a smooth operation over time requires significant technical expertise and ongoing maintenance.

Foundation models offer transformative potential, but their adoption in the enterprise domain takes time and effort. Addressing these challenges head-on will be crucial for businesses to harness the full power of foundation models and realize their projected value.

**💡 Pro tip: Are you concerned about the security risks of Large Language Models? Lakera has led the charge with Gandalf/Mosscap, the most extensive global red-teaming effort for LLMs. Learn more about how to protect your LLMs against prompt injections.**

Foundation models: Key research

The field of foundation models has seen rapid advancements, with numerous research papers contributing to its growth. Here are some pivotal research papers that have significantly impacted the trajectory of foundation models:

Attention Is All You Need  

The paper by Vaswani et al. (2017) introduced the Transformer architecture, revolutionizing natural language processing by enabling parallel training and inference on long text sequences. It laid the groundwork for many subsequent models in the NLP domain.  

Unsupervised Representation Learning with Deep Convolutional Generative Adversarial Networks

The paper by  Radford et al. (2016) introduced DCGANs, a generative model that uses convolutional neural networks to generate high-fidelity images. It marked a significant step in the development of image-generating models.

BERT: Pre-training of Deep Bidirectional Transformers for Language Understanding  

BERT, authored by Devlin et al. (2018) at Google, stands for Bidirectional Encoder Representations from Transformers and uses bidirectional context to better understand the meaning of words in a sentence. It has become a widely used pretraining model in natural language processing.

DALL-E: Creating Images from Text

DALL-E is a generative model developed by Ramesh et al. (2021)  at OpenAI that can create images from textual descriptions. It can generate realistic and imaginative images from natural language input.

On the Opportunities and Risks of Foundation Models

This comprehensive paper by Rishi Bommasani, Percy Liang, et al. (2021) highlights the progress made in foundation models while addressing their risks. It delves into potential ethical and societal concerns, the impact on job displacement, and the potential for misuse.

These research papers have played a crucial role in shaping the landscape of foundation models, offering insights, methodologies, and innovations that have driven the field forward.

Companies Contributing to Foundation Models Research and Development


Founded in 2015, OpenAI conducts pioneering research in machine learning, natural language processing, computer vision, and robotics. They have been at the forefront of foundation models, introducing models like GPT-3, DALL-E, and ChatGPT. Notably, OpenAI's GPT-3 served as the backbone for ChatGPT, and their collaboration with Microsoft in 2023 led to the integration of ChatGPT into the Bing search engine. OpenAI's models, especially GPT-3 and DALL-E, have set benchmarks in the AI community, pushing the boundaries of what foundation models can achieve.


Anthropic aims to ensure that artificial general intelligence benefits all of humanity. While specific details about their contributions to foundation models are not mentioned in the provided content, their focus on building robust, reliable, and safe AI systems aligns with the goals of foundation models. Anthropic's emphasis on safety and reliability is crucial as foundation models become more integrated into various applications.


Cohere offers a suite of large language models via API, allowing developers to build applications that understand or generate written content without the need to train or maintain their large language models. Cohere accelerates the development of AI-powered applications and services by providing easy access to foundation models.


Google has been a major player in the AI research space, developing influential models like T5 and BERT. In 2023, they introduced Bard, a large language model designed to compete with GPT-3. Google's BERT has become a standard tool for many NLP researchers, and their continuous contributions drive innovation in the foundation models domain.


Microsoft has been active in the NLP space, launching services like the Language Understanding Intelligent Service. Their partnership with OpenAI has led to innovative applications like the integration of ChatGPT into Bing. Microsoft's collaboration with industry leaders and their research initiatives contribute to the growth and application of foundation models.

Hugging Face

Hugging Face is renowned for developing and maintaining open-source resources that enable easy access to foundation models like BERT, GPT, and RoBERTa. They have significantly contributed to the NLP community, making foundation models more accessible to developers. Hugging Face's tools and libraries have democratized access to state-of-the-art models, fostering innovation and application development.


Lakera has made significant strides in ensuring the security of both closed and open-source models. To fortify the security landscape of large language models (LLMs), Lakera unveiled Gandalf/Mosscap, the most extensive global red-teaming effort for LLMs. Their commitment to AI security is further underscored by the development of Lakera Guard, a product meticulously crafted to shield LLMs.

**💡 Pro tip: Consider using Lakera Guard for enhanced security when integrating LLMs into your applications. It offers protection against prompt injections and safeguards against data leakage and hallucinations. Dive deeper into its features and benefits in this guide.**

Lakera Guard offers robust protection against a plethora of common LLM security risks. It provides defenses against direct and indirect prompt injection attacks, mitigates risks associated with data leakage, especially when LLMs interact with sensitive information, and ensures content moderation in line with ethical guidelines. Moreover, it detects model outputs that may be misaligned with the input context.

Developers leveraging Lakera Guard benefit from its continuously updated security intelligence, which amalgamates insights from various sources, including the LLM developer community, the Lakera Red Team, and the latest LLM security research. With its proprietary vulnerability database expanding daily, Lakera Guard is a testament to Lakera's mission of securing every LLM application globally.

**🛡️ Discover how Lakera’s Red Teaming solutions can safeguard your AI applications with automated security assessments, as well as identifying and addressing vulnerabilities effectively.**

Foundation Models: What's Next

The trajectory of foundation models is poised for transformative advancements. As we move forward, we can anticipate more refined models that are energy-efficient, cost-effective, and tailored to specific domains. Integrating multi-modal data sources like text, images, and audio will enhance their capabilities. Furthermore, there will be a stronger emphasis on addressing ethical, privacy, and security concerns. Collaborative efforts between academia, industry, and regulatory bodies will guide responsible development and deployment of these models. The future beckons a harmonized blend of innovation, responsibility, and inclusivity in foundation models.

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