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Generative AI Explained – ChatGPT, DALL-E and Beyond
Artificial Intelligence

Generative AI Explained – ChatGPT, DALL-E and Beyond

Understanding How AI Creates Text and Images From Scratch

by Arsenii Drobotenko

Data Scientist, Ml Engineer

Jun, 2025
9 min read

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Generative AI Explained – ChatGPT, DALL-E and Beyond

Generative AI: The New Frontier in Content Creation

Generative AI is radically transforming how we create, interact with, and experience digital content. From writing essays and composing music to generating artwork and assisting with coding, these systems are reshaping the digital landscape for professionals and newcomers alike. In this expanded guide, you’ll discover what generative AI is, how leading tools like ChatGPT, DALL·E, Stable Diffusion, Claude, and Gemini work, their underlying technologies, and what sets them apart.

What Is Generative AI?

Generative AI refers to artificial intelligence systems capable of creating new content—text, images, music, code, and more—by learning patterns from vast datasets. Unlike traditional AI, which primarily analyzes or classifies data, generative AI produces original outputs that didn’t previously exist. Its applications are wide-ranging: from generating synthetic data for research, designing new pharmaceuticals, and creating realistic images, to powering chatbots and virtual assistants.

How Generative AI Works: Under the Hood

Generative AI models are typically built on foundation models — large, deep learning architectures trained on enormous amounts of unstructured data (text, images, audio, etc.). The most common foundation models are large language models (LLMs) for text and diffusion models for images.

Training Process

  • Data collection: models are trained on terabytes of raw data, such as text from the internet or massive image collections;
  • Learning patterns: during training, the model performs millions of prediction tasks (e.g., predicting the next word in a sentence or the next pixel in an image), adjusting its internal parameters to minimize errors;
  • Neural networks: the result is a neural network with billions of parameters—numerical values encoding knowledge about language, images, or other data types.

Training these models is resource-intensive, requiring thousands of GPUs and weeks of computation, often costing millions of dollars. Open-source models like Llama-2 help democratize access by sharing pre-trained models with the public.

Chat Models: AI That Talks

Chat models are a type of generative AI that produce human-like text responses. They are based on the transformer architecture — a breakthrough in deep learning that enables models to understand and generate coherent, context-aware text.

How Transformers Work

Transformers process input text by:

  • Tokenizing the input (breaking it into words or subwords);
  • Embedding tokens into high-dimensional vectors representing meaning and position;
  • Applying self-attention to understand relationships between words;
  • Generating output by predicting the next word in a sequence, one step at a time.

Popular Chat Models

ModelDeveloperKey Features & Differentiators
ChatGPTOpenAIConversational, context-aware, customizable responses; widely used and integrated with Apple Intelligence
ClaudeAnthropicMultimodal (text, images, audio), follows ethical “Constitutional AI” guidelines for safer outputs
GeminiGoogleIntegrated with Google’s ecosystem; supports conversational search and productivity tasks

All these models are based on transformers and are designed to understand prompts and generate human-like responses. They differ in training data, ethical guidelines, interface, and ecosystem integration, but their core technology is similar.

Image Models: AI That Draws

Image generation models turn text prompts into original images. The most advanced models use diffusion techniques, which iteratively refine random noise into a coherent image.

How Diffusion Models Work

  • Noise injection: the model starts with a random noise image;
  • Denoising process: it gradually “denoises” the image, step by step, guided by the text prompt, until a detailed image emerges;
  • Training: the model learns this process by training on millions of image-caption pairs, learning to reverse the noise and generate realistic visuals.

Popular Image Models

ModelDeveloperKey Features & Differentiators
DALL·EOpenAIGenerates images in diverse styles (paintings, emojis, photorealism); can combine concepts creatively
Stable DiffusionStability AIOpen-source, customizable, runs on consumer hardware, supports inpainting and outpainting
MidjourneyMidjourney, Inc.Known for unique, artistic style; accessed via Discord; popular with designers and artists

Stable Diffusion’s open-source nature allows for extensive customization and local use, while DALL·E and Midjourney are cloud-based and often easier for beginners.

Beyond Text and Images: Multimodal and Specialized Generative AI

Modern generative AI is not limited to just text or images. Multimodal models can process and generate multiple types of content—text, images, audio, and even video. Claude 3, for example, can process images and audio alongside text, enabling new applications like generating product descriptions from images or analyzing audio content.

Generative AI is also used for:

  • Music and audio generation: creating original music tracks or sound effects;
  • Video synthesis: generating short video clips or animations;
  • Synthetic data: producing artificial datasets for research, privacy, or training other AI models.

Advanced Model Architectures

While transformers and diffusion models dominate, other architectures are important in generative AI:

  • Variational autoencoders (VAEs): good for generating new data similar to the training set, often used for images or anomaly detection;
  • Generative adversarial networks (GANs): use two competing networks (generator and discriminator) to create highly realistic images, videos, or audio;
  • Autoregressive models: generate sequences step-by-step, used in both text and image generation.

Each architecture has strengths and weaknesses, and the choice depends on the task.

Real-World Applications of Generative AI

DomainApplication Examples
Content CreationWriting articles, generating marketing copy, composing music, creating digital art
EducationPersonalized tutoring, automated grading, content summarization, curriculum generation
HealthcareDrug discovery, medical imaging synthesis, patient communication
SoftwareCode generation, bug fixing, code review, documentation
EntertainmentGame asset creation, script writing, special effects
BusinessAutomated reporting, data analysis, customer support chatbots

A Word of Caution: Hallucinations and Inaccuracy

Generative AI models do not understand facts — they generate what is statistically likely based on their training data. This means:

  • Chat models may “hallucinate” facts, inventing plausible - sounding but incorrect information;
  • Image models may misinterpret prompts or blend objects unrealistically;
  • Confident errors: models often present results confidently, even when wrong.

Always verify critical information from trusted sources. These tools are not search engines or reliable knowledge databases.

FAQs

Q: What is generative AI? A: It’s a type of AI that creates new content—text, images, music, or code—based on what it has learned from large datasets.

Q: How do ChatGPT, Claude, and Gemini differ?
A: All are large language models for text generation. They differ in training data, ethical frameworks, user interface, and integration with other platforms, but serve similar purposes.

Q: Do image models like Midjourney or DALL·E “see” the prompt?
A: Not like a human. They translate words into mathematical concepts and generate images statistically, without true understanding.

Q: Can generative AI make mistakes?
A: Yes—chatbots can give wrong or made-up answers, and image tools may render prompts inaccurately or inconsistently.

Q: Is Stable Diffusion better than Midjourney? A: It depends. Stable Diffusion is open-source and highly customizable. Midjourney is easier to use and known for its artistic style.

Q: Can I train my own generative AI model?
A: Yes, with enough data, computing resources, and expertise. Open-source frameworks like TensorFlow and PyTorch support custom model development, but training large models from scratch is resource-intensive.

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