Why 2025 will be the year of the AI App (and not foundation models)

AI applications are expected to take center stage in 2025, shifting focus from foundation models to practical tools that bring artificial intelligence capabilities to mainstream users.

The evolving AI landscape: The technology sector is witnessing a significant transition from basic AI-powered tools to sophisticated applications that deeply integrate artificial intelligence into their core functionality.

• Chinese AI model DeepSeek has demonstrated capabilities matching major AI companies while operating at lower costs, suggesting large language models are becoming commoditized
• The development focus is moving beyond simple “AI wrapper” applications toward products that meaningfully incorporate AI technology
• Software development has emerged as an early proving ground, with businesses reporting that AI now handles over 30% of engineering tasks

Emerging trends in AI automation: AI agents are becoming more sophisticated and user-friendly, eliminating the need for complex prompt engineering.

• Customer service operations are implementing advanced AI systems capable of handling complaints and developing creative solutions
• AI agents are being designed to perform increasingly complex tasks autonomously
• The technology is becoming more accessible to users without technical expertise in AI prompt creation

Market dynamics and innovation: A new AI economy is taking shape, characterized by diverse applications rather than a single dominant platform.

• Multiple AI-powered applications are expected to launch throughout 2025
• Major AI companies continue developing more sophisticated models to support application developers
• The democratization of AI technology is enabling smaller companies to create innovative solutions

Industry transformation: The customer service sector exemplifies how AI is reshaping traditional business operations.

• AI systems are handling increasingly complex customer interactions
• Automated solutions are finding novel approaches to resolving customer issues
• The technology is proving capable of managing tasks previously reserved for human agents

Looking ahead: Assessing AI’s trajectory: While breakthroughs in foundation models will continue, the real measure of AI’s impact in 2025 will be determined by how effectively these technologies are integrated into practical applications that solve real-world problems.