What is Fine-tuning? - Explanation & Meaning

Definition

Fine-tuning is the process of further training a pre-trained AI model on a smaller, domain-specific dataset to specialize the model for a particular task, industry, or communication style.

Technical explanation

Fine-tuning builds on transfer learning: a model trained on a broad dataset (pre-training) is specialized by further training it on domain-specific data. Full fine-tuning adjusts all model parameters, which is compute-intensive and requires significant GPU capacity. Parameter-efficient fine-tuning (PEFT) methods like LoRA (Low-Rank Adaptation) adjust only a fraction of parameters by adding low-rank matrices to existing model layers, making the training process 10-100x cheaper. QLoRA combines LoRA with 4-bit quantization, enabling fine-tuning on a single consumer GPU. The process requires a carefully curated dataset in the correct format (typically instruction-response pairs), hyperparameter optimization (learning rate, epochs, batch size), and evaluation on a held-out test set. In 2026, providers such as OpenAI, Anthropic, and Together AI offer fine-tuning-as-a-service. The choice between fine-tuning and RAG depends on the use case: fine-tuning excels at adapting style, format, and domain-specific terminology, while RAG is better for dynamic knowledge sources.

How MG Software applies this

At MG Software, we apply fine-tuning when clients need a model that masters their specific terminology, communication style, or business processes. We use LoRA and QLoRA for cost-effective training on domain-specific datasets and combine fine-tuned models with RAG for the best of both worlds.

Practical examples

• A medical software company fine-tuning an LLM on thousands of medical records and clinical guidelines, enabling the model to accurately understand medical terminology and generate reports meeting industry-specific standards.
• An e-commerce platform fine-tuning a model on historical product descriptions to automatically generate consistent, brand-aligned product copy in the correct tone of voice.
• A financial services firm using LoRA to fine-tune an open-source model on internal analysis reports, so the model adopts the organization's specific reporting style and terminology.

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