What Are AI Tokens?

Source: https://blogs.nvidia.com/blog/ai-tokens-explained/

This NVIDIA blog post explains that AI tokens are the fundamental units of data—such as words, pixels, or audio fragments—that models process to learn and generate information. Through a process called tokenization, raw data is converted into numerical representations, allowing AI to understand relationships and context, like distinguishing between different meanings of the same word. Tokens serve as the “currency” of AI economics, where “AI factories” (specialized data centers) aim to maximize processing speed and minimize cost per token to drive revenue and intelligence manufacturing. The article also highlights the emergence of “reasoning tokens” in advanced models, which enable “long thinking” for complex problem-solving by generating internal steps before providing a final output.