Local AI runs on your device or server. Cloud AI runs on provider infrastructure and is usually accessed through an app or API.
In practice
Local AI can reduce cloud costs and keep inference close to your data. Cloud AI usually offers stronger frontier models, managed scaling, better uptime, and less setup work.
What to watch
The decision is not all-or-nothing. Many teams use cloud models for hard tasks and local models for privacy-sensitive or high-volume simple tasks.