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AI agents

What Is an AI Agent? Types, Functions, and Applications

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An AI agent is software that works toward a goal by interpreting information, choosing steps, using tools and data it is allowed to access, and acting on what it learns. Unlike a chatbot that only returns text, an agent can call an API or database, inspect the result, and continue the task—or pause for human approval.

What makes software an AI agent?

The defining feature is not that software uses AI, nor that it can hold a conversation. It is that the system can take steps toward an externally specified goal. NIST describes agents as “Software programs that can interact with their environment, receive information, and undertake self-directed actions in service of a larger, externally-specified goal.” Microsoft similarly describes an agent as a system that achieves a set goal by taking action based on inputs it perceives in its environment.

In practice, an agent combines a decision-maker—often, but not always, a large language model—with instructions, state, connected tools, permissions, and an execution loop. It receives an objective, selects an action, observes the result, and decides what to do next. The loop may end when the goal is met, a limit is reached, or the system needs clarification or approval.

How an agent differs from a chatbot

A chatbot can answer a question by generating text and then stop. An agent is connected to an environment where its choices can have effects. For example, a model might produce SQL that an agent runtime submits to a database, or structured JSON that the runtime uses to trigger an external API call. The model’s output alone does not perform those actions: the surrounding software must validate, authorize, and execute them.

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The distinction is about capability and setup, not a rigid product category. A chatbot connected to tools may behave agentically for some tasks; an agent may still respond conversationally, and it may be configured to ask before acting. A system that follows a fixed sequence of steps can automate work without making flexible decisions, while an agent can choose among steps based on new observations.

How AI agents work: the action loop

Most agent designs can be understood as a cycle. Not every implementation has a separate component for each stage, and some steps may be handled by software rules rather than a model.

  1. Perceive: Accept a user message, event, file, sensor reading, or result from another system.
  2. Interpret and reason: Apply instructions, rules, and model capabilities to understand the request, relevant context, and constraints.
  3. Plan: Choose a next step or break the larger goal into smaller tasks. The plan may be revised as new information arrives.
  4. Retrieve and remember: Read approved sources and retain the relevant state, such as what has already been checked or which step is pending.
  5. Use tools: Call an API, database, browser, code runtime, enterprise application, or other permitted interface.
  6. Act: Send a response, update a record, generate code, run a workflow, or control a device.
  7. Observe and adapt: Inspect the outcome, recover from an error, ask for clarification, seek approval, or stop.

The action layer is made up of the functions, APIs, or systems the agent can use. Having a tool available does not mean the agent should have unrestricted access to it: its identity and permissions determine which actions it can actually perform. A sound design separates deciding what to do from enforcing whether that action is allowed.

Example: handling a support request

A customer-support agent might retrieve the relevant account policy, check an order system, and draft a response based on both sources. If the order cannot be verified, the policy is unclear, or the proposed action needs authority the agent does not have, it can escalate instead of guessing or making an unauthorized change. This is a complete agent workflow: the system gathers information, uses tools, evaluates results, and either acts within its limits or hands the case to a person.

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Types of AI agents

There is no single universally used taxonomy. Microsoft’s overview includes reactive, model-based, goal-based, and utility-based agents; IBM presents five types ranging from simple to advanced; NIST’s 2025 tool-use work emphasizes capabilities, permissions, and the environment in which actions occur. These labels overlap and are best treated as design lenses rather than mutually exclusive boxes.

Type How it chooses actions Useful when
Simple reflex or reactive Uses rules that map the current observation to an action; it has little or no memory. The situation is predictable and sufficiently observable, and a direct response rule is enough.
Model-based Maintains an internal representation of relevant state, including information not visible in the latest observation. The agent must account for a changing or partly hidden environment.
Goal-based Evaluates possible actions in relation to a target outcome. There are multiple possible steps and the system needs to choose those that move toward a goal.
Utility-based Compares possible outcomes using a preference or utility function. Several outcomes could meet the goal, but trade-offs such as time, cost, or quality matter.
Learning Updates its behavior using data or feedback. Behavior should improve or adapt as relevant examples and feedback become available.
Tool-using or LLM agent Combines a general-purpose model with instructions, state, tools, permissions, and an execution loop. A task needs language understanding or flexible decisions alongside controlled access to external capabilities.
Multi-agent system Uses multiple agents that coordinate or delegate parts of a workflow. A workflow can be usefully divided among specialized roles, with coordination overhead justified by the task.

These approaches can be combined. A tool-using agent, for example, might use a model of task state, pursue a goal, and apply a utility function to choose between permitted options. “Learning” also describes a capability that may sit alongside another design rather than a separate runtime architecture.

What AI agents can do

Documented application areas include conversational assistance, customer and employee support, software design, code generation, IT automation, data analysis, research, workflow automation, and business-process coordination. The useful question is not simply whether an agent can perform a task, but whether its inputs, tools, authority, error handling, and review process fit the consequences of that task.

Software development

A coding agent can inspect a repository, make a proposed edit, run checks it is authorized to run, and prepare a change for review. Keeping a human review step in the workflow lets the agent do preparatory work without treating generated changes as automatically safe to merge or deploy.

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Research and analysis

An agent can gather information from approved sources, query structured data, compare results, and produce an analysis. Its output is only as dependable as the sources it can access and the checks built into the workflow. For work where a wrong result matters, retain traceable inputs and provide a route for verification rather than treating a fluent answer as proof.

Web-page capture as a tool

A developer building a web research agent may need a page image or PDF as an input to a later step. A screenshot service is one possible tool in that larger workflow: the agent requests a capture, receives the result, and can then pass it to another permitted step. ScreenshotNeo is a website screenshot API and MCP server for developers. Its MCP tools include take_screenshot, get_page_info, and capture_pdf, so an AI agent using an MCP client such as Claude or Cursor can access those capabilities.

With the API, one GET request can return a PNG, JPEG, WebP, or PDF. The cURL example below saves a WebP capture of Stripe; replace the URL with the page the workflow is authorized to access. See the ScreenshotNeo API documentation for the request options and setup.

curl -G "https://api.screenshotneo.com/v1/shot" -d access_key=YOUR_API_KEY --data-urlencode url=https://stripe.com -o shot.webp

The equivalent Python request is:

import requests
r = requests.get("https://api.screenshotneo.com/v1/shot", params={"access_key": "YOUR_API_KEY", "url": "https://stripe.com"}, timeout=90)
open("shot.webp", "wb").write(r.content)

And in Node.js:

const q = new URLSearchParams({ access_key: 'YOUR_API_KEY', url: 'https://stripe.com' });
const res = await fetch(`https://api.screenshotneo.com/v1/shot?${q}`);

Before relying on a capture in an agent workflow, check the response status and headers and handle unsuccessful or unexpected results explicitly. ScreenshotNeo returns X-Page-Verdict and X-Billed headers to identify the page outcome and whether the request was billed. Its clean-capture options accept a cookie or consent banner like a visitor and remove more than 60 known consent platforms, newsletter popups, and chat widgets; each of those steps can be turned off. Bot checks or CAPTCHAs, blank pages, timeouts, failed loads, and cache hits are not billed. These behaviors are useful for making the tool result clearer, but do not replace checking whether the returned page is appropriate evidence for the agent’s task.

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ScreenshotNeo has 63 options, including full-page capture with lazy images loaded, CSS-selector element capture, dark mode, device presets and custom viewports, retina scale, PDF paper size and page ranges, HTML/CSS-to-image, custom CSS and JavaScript, clicking or hiding elements, selector or network-idle waits, request and resource blocking, headers, cookies, user agent and Authorization, timezone and geolocation, transparent backgrounds, resizing, configurable-TTL caching, signed links, asynchronous jobs with signed webhooks, bulk capture of 100 URLs per call, a usage API, and an OpenAPI spec. Parameters used by other screenshot APIs also work, which can make switching easier. Pick only the options the task needs, and scope the URLs and credentials an agent can use.

Or skip the browser setup

Instead of installing and operating a browser capture stack, an agent can call the ScreenshotNeo endpoint above. Cookie banners, popups, and chat widgets are removed before the shot; bot checks, blank pages, and failed loads are never billed; and the MCP server lets AI agents take screenshots. The Free plan includes 1,000 screenshots a month with no card, and paid plans start at $5 for 3,000 screenshots. Every feature is on every plan. Learn about ScreenshotNeo, or sign up free for 1,000 screenshots a month with no card.

Are AI agents autonomous?

Autonomy is a setting of a system’s design, permissions, and deployment—not an all-or-nothing property of the word “agent.” One agent may only draft a suggested action. Another may execute a narrow, reversible operation without a person checking each step. A system with broader permissions can take more consequential actions, but that also increases the importance of controls and oversight.

Decide in advance which actions are allowed automatically, which require confirmation, and which are prohibited. Human approval is especially important when an action has significant consequences, is difficult to reverse, or depends on uncertain information. The agent should also have clear stopping conditions: an error, conflicting sources, missing authorization, or an unmet confidence requirement should not silently become permission to improvise.

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Reliability, security, and governance

Current agentic systems combine general-purpose models with software scaffolding that lets them manipulate tools. NIST identifies the resulting security and reliability concerns as central to agent use. The model can misinterpret a request or return an unsuitable tool call; external content can attempt to steer behavior; and a tool can have effects beyond the immediate conversation. Controls should be designed around the entire path from input to action, not just the model’s text.

  • Use least privilege: Give each agent only the data and actions its task requires. Use a defined identity and limit the scope of credentials.
  • Set data boundaries: Specify which sources may be read, what information may be retained, and where results may be sent.
  • Protect tool use: Validate inputs and outputs, treat retrieved or user-provided content as untrusted, and guard against prompt and tool injection.
  • Log meaningful events: Record the inputs, tool calls, outcomes, approvals, and failures needed to understand what happened, subject to applicable privacy and retention requirements.
  • Test and evaluate: Check expected behavior, edge cases, unauthorized requests, tool failures, and recovery before allowing real actions.
  • Plan for recovery: Define when the agent must stop or escalate, and provide rollback or other remediation for changes that can be reversed.
  • Monitor external actions: Watch for unexpected activity and changes in tools, permissions, or workflow outcomes over time.

These safeguards also improve observability: developers need to know what the agent attempted, what the connected system returned, and why the workflow stopped. NIST’s agentic-AI work emphasizes evaluation and testing, standards, interoperability, governance, and risk management. Those concerns apply whether a workflow uses one agent or several.

Choosing an agent design

Compare designs against the job they must perform rather than selecting the most autonomous option by default. These are the main trade-offs to examine:

  • Autonomy and approval: Which steps may run unattended, and where must a person approve?
  • Tools, identity, and permissions: Which data sources and systems are available, under whose identity, and with what access limits?
  • Planning and memory: Does the task need multi-step planning or retained state, and can the system work within its context limits?
  • Reliability and recovery: Can the workflow detect incorrect or incomplete results, expose its actions, and recover or escalate?
  • Integration and operating cost: What effort is needed to connect and maintain tools, and what resources does the workflow consume?
  • Privacy, security, and auditability: Can data handling and consequential actions be controlled and reviewed?
  • Single versus multiple agents: Does splitting work across specialists create enough value to justify coordination and additional failure points?

A simple, predictable workflow may be better served by a reactive rule or fixed automation. A flexible task involving changing information may benefit from planning and tools, provided that the action space is constrained and the results can be checked. Multi-agent coordination is not automatically an upgrade: it adds handoffs and coordination needs, so use it when the work genuinely divides into useful specialized roles.

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What investment figures say—and do not say

IBM reported in 2025 that 80% of executives are increasing investment in agentic AI and that spending is projected to nearly triple by 2027. This is a survey-based IBM Institute for Business Value figure as reported by IBM, not a universal market forecast or a guarantee that a particular organization will see value. It indicates reported executive interest; a deployment decision still depends on the workflow, costs, risks, and controls involved.

Frequently Asked Questions

Does an AI agent have to use a large language model?

No. Agents can use rules, models, or a combination. Large language models are common in tool-using agents, but they are not a requirement for software that perceives a state and takes goal-directed actions.

Is an automated workflow always an AI agent?

No. A fixed sequence can automate work without choosing actions in response to observations. An agent makes or selects actions in pursuit of a goal, although an agent can also operate inside a workflow with fixed stages.

Can an agent decide to stop and ask for help?

Yes. Escalation, clarification, and approval can be designed as valid outcomes in the agent’s action loop, rather than requiring it to complete every task unattended.

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