What is LLM inference?

LLM inference refers to using trained LLMs, such as GPT-4, Llama 4, and DeepSeek-V3, to generate meaningful outputs from user inputs, typically provided as natural language prompts. During inference, the model processes the prompt through its vast set of parameters to generate responses like text, code snippets, summaries, and translations.

Essentially, this is the moment the LLM is actively "in action." Here are some real-world examples:

• Customer support chatbots: Generating personalized, contextually relevant replies to customer queries in real-time.
• Writing assistants: Completing sentences, correcting grammar, or summarizing long documents.
• Developer tools: Converting natural language descriptions into executable code.
• AI agents: Performing complex, multi-step reasoning and decision-making processes autonomously.

What is an inference server?

An inference server is the component that manages how LLM inference runs. It loads the models, connects to the required hardware (such as GPUs), and processes application requests. When a prompt arrives, the server allocates resources, executes the model, and returns the output.

LLM inference servers do much more than simple request-response. They provide features essential for running LLMs at scale, such as:

• Batching: Combining multiple requests to improve GPU efficiency
• Streaming: Sending tokens as they are generated for lower latency
• Scaling: Spinning up or down replicas based on demand
• Monitoring: Exposing metrics for performance and debugging

In the LLM space, people often use inference server or inference framework somewhat interchangeably.

• An inference server usually emphasizes the runtime component that receives requests, runs models, and returns results.
• An inference framework often highlights the broader toolkit or library that provides APIs, optimizations, and integrations for serving models efficiently.

Popular inference frameworks include vLLM, SGLang, TensorRT-LLM, and Hugging Face TGI. They’re designed to maximize GPU efficiency while making LLMs easier to deploy at scale.

What is inference optimization?

Inference optimization is a set of techniques to make LLM inference faster, cheaper, and more efficient. It’s about reducing latency, improving throughput, and lowering hardware costs without hurting model quality.

Some common strategies include:

• Continuous batching: Dynamically grouping requests for better GPU utilization
• KV cache management: Reusing or offloading attention caches to handle long prompts efficiently
• Speculative decoding: Using a smaller draft model to speed up token generation
• Quantization: Running models in lower precision (e.g., INT8, FP8) to save memory and compute
• Prefix caching: Caching common prompt segments to reduce redundant computation
• Multi-GPU distribution/Parallelism: Splitting LLMs across multiple GPUs for larger context windows

In practice, inference optimization can make the difference between an application that feels sluggish and expensive, and one that delivers snappy, cost-efficient user experiences.

Learn more in the inference optimization chapter.

Why should I care about LLM inference?

You might think: I’m just using OpenAI’s API. Do I really need to understand inference?

Serverless APIs like OpenAI, Anthropic, and others make inference look simple. You send a prompt, get a response, and pay by the token. The infrastructure, model optimization, and scaling are all hidden from view.

But here’s the thing: the further you go, the more inference matters.

As your application grows, you'll eventually run into limits (e.g., cost, latency, customization, or compliance) that serverless APIs can’t fully address. That’s when teams start exploring hybrid or self-hosted solutions.

Understanding LLM inference early gives you a clear edge. It helps you make smarter choices, avoid surprises, and build more scalable systems.

• If you're a developer or engineer: Inference is becoming as fundamental as databases or APIs in modern AI application development. Knowing how it works helps you design faster, cheaper, and more reliable systems. Poor inference implementation can lead to slow response time, high compute costs, and a poor user experience.
• If you're a technical leader: Inference efficiency directly affects your bottom line. A poorly optimized setup can cost 10× more in GPU hours while delivering worse performance. Understanding inference helps you evaluate vendors, make build-vs-buy decisions, and set realistic performance goals for your team.
• If you're just curious about AI: Inference is where the magic happens. Knowing how it works helps you separate AI hype from reality and makes you a more informed consumer and contributor to AI discussions.

For more information, see serverless vs. self-hosted LLM inference.

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