Consumers are using AI-powered services for most of their daily activities, whether directly or indirectly. You’ve probably already used AI today, even if you didn’t realize it. According to Microsoft’s “AI Diffusion Report 2025,” one in six people worldwide use AI tools. Maybe your car’s GPS suggested a different route, your streaming service recommended a show or your online shopping app made a product recommendation. That’s AI doing its thing, behind the scenes.
Or you may have made a conscious choice to use an AI chatbot. Menlo Ventures, a tech-focused venture capital firm, surveyed 5,031 U.S. adults for its “2025: The State of Consumer AI” report. The survey explored how adults used AI tools to complete specific activities over six months. It found that:
- 61% of adults use AI.
- 19% interact with AI daily.
- 1.2 billion use AI at least monthly.
- 97% use free versions of AI.
Here’s the breakdown by generation:
- 76% of Gen Z
- 70% millennials
- 59% Gen X
- 45% baby boomers
But despite its widespread use, people still struggle to understand how AI sounds so human. Learn how AI “reads” your questions so you can make informed decisions on how to use it.
What is agentic AI?
Agentic AI is designed to act independently and make recommendations. For example, an agentic AI tool can plan driving routes, send emails on your behalf, manage your schedule or solve problems without you having to tell it every step to take. It self-directs within the boundaries of its programming.
Some AI tools can act on their own, based on the goals, job roles or knowledge they’ve been trained on.
While agentic AI doesn’t have human consciousness, its ability to act and make decisions makes it feel more proactive than reactive. Add to that a conversational tone, human wit and sarcasm, and recognition of your moods, and it can seem very human. But it isn’t. Here’s what’s really going on.
An example of how AI processes a question
Let’s say you ask AI this question: “Hey, can you explain what full-coverage car insurance is? It’s all so confusing.”
How a human would handle this question
If you made this statement to your insurance agent, you’d have a conversation. Your agent specializes in home and auto insurance. As soon as you call them, they’ll know you need information. They’d talk to you about the age of your car, confirm your driving habits and explain that full coverage combines liability, collision and comprehensive insurance. They’d give you an example, and discuss your options and budget. They’d adjust their tone based on your word choices, voice inflection and familiarity.
AI wouldn’t do that.
How AI would process this question
AI is a good guesser. As soon as you tap “send,” AI breaks your message down into tiny pieces, or “tokens,” so it can analyze patterns. It uses them to guess what you’re asking.
Here’s an example of how AI might talk to itself to process what you’re asking:
| Token | AI’s guess |
| “Hey” | They greeted me informally, so I will respond in a friendly, informal manner, as per my training. |
| “can you explain” | The user wants me to explain something. |
| “full-coverage” | This is a vague descriptor; I need more information. |
| “car insurance” | Chances are high that the phrase “full-coverage” relates to car insurance, so I will assume that my task relates to “full-coverage car insurance.” I will find information on full-coverage car insurance and any slang terms associated with it. And I will narrow my search to websites focused on car insurance for personal use. I will suggest business auto as a follow-up prompt only if the user inputs business activities during the session. |
| “so confusing” | The user was confused, so they are not an expert on this topic. I will present all information in plain language. |
From there, the AI may provide a general explanation of what full-coverage auto insurance is in an approachable tone. It might ask if you’d like more information based on your interaction and suggest prompts, such as:
- Tell me what kind of car you drive and how old it is.
- Tell me what you can afford to pay if you have a claim.
- Tell me what insurance my state requires.
- Explain auto insurance for business use.
AI looks for text patterns, not truth
AI is trained on large volumes of text. It learns what words tend to appear together and what a “good answer” looks like. It predicts what words are likely to come next based on patterns it has seen before.
That’s why AI can explain things in plain language or rewrite something to sound friendlier or more formal. It’s also why AI can be confident-sounding, but wrong.
AI doesn’t immediately check the law, your policy or your insurer’s rules. It’s doing its best to sound helpful and complete the task it was given. It can make assumptions, ask follow-up questions and offer alternatives. Sometimes AI makes stuff up just to complete its goal, which is to answer a question or complete a task. Occasionally, it gets stuck in its own echo chamber, reinforcing misinformation. For this reason, it may not always be correct.
This is why every AI tool contains the disclaimer, “AI-generated content may be incorrect.” Always verify AI-generated recommendations and content before acting on them.
AI has a short memory
AI tools have limited working memory. And just like a person trying to hold too many thoughts at once, AI can get confused or lose its train of thought. Say you paste in a long document, and ask several follow‑up questions at once. Then you rapidly switch topics. The AI may “forget” details from earlier in your conversation. That can lead to answers that feel off or incomplete. If AI’s responses don’t match what you inputted earlier in the chat, remind it to get it back on track.
AI can be a useful tool, but it’s still a machine
You can use AI to enhance your knowledge, but it shouldn't be your only source of information. Despite how helpful and convincing it can sound, AI doesn’t know you, and it can be wrong. Let AI handle routine tasks, like providing general information on topics, offering inspiration or summarizing documents. When it comes to important aspects of your life, rely on human experts for advice. Stay cyber-educated out there!