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Visual explanation of AI Agent components: Memory, Instructions, and Tools working together to create autonomous AI systems

How AI Agents Work: Memory, Instructions, and Tools

In Part 1 (Understanding AI Agents, Agentic AI, and Multi-Agent Systems), we introduced what AI agents are and why they matter for small and medium-sized enterprises (SMEs). In this post, we go one level deeper and explore how AI agents actually work — technically and practically — using three fundamental components: memory, instructions, and tools.

Dennis Hagers
4 min read