Value within the artificial intelligence industry is slowly shifting, from the companies developing models to the apps building on top of them. 

Early in the AI race, critics viewed apps like Perplexity, Replit, Sesame and Abridge as second-rate middlemen, slapping an interface on someone else’s technology. They were disparagingly known as AI wrappers: companies with entire apps or businesses wrapped around existing models. Companies like OpenAI, Google, Meta and Anthropic developed their own models.

The arrival of ultra-efficient models and increasing model commoditization accelerated the shift.

“There was an impression that the only way to compete in AI would be to raise hundreds of millions of dollars to pre-train these web-scale models that could solve every problem underneath the sun, and that was the only game in town for AI,” said Shiv Rao, founder and CEO of the healthcare AI startup Abridge. “Very quickly, people figured out that actually, value moves up the stack.” 

Megacaps like Microsoft poured billions into the first stage of the AI arms race, focusing on the infrastructure and model layer. But models are now increasingly looking commoditized, narrowing the advantage that any model-builder had. While they focused on delivering raw capability and intelligence, app companies looked at real-world uses and solutions.

“[Wrapper] just sort of means that it feels less thoughtful. It feels like you’re giving this little package around what was built. As opposed to what it really means is, ‘I’m going to understand the customer’s problem,’ ” said Andreessen Horowitz partner Bryan Kim. “I’m going to marry this and deliver a solution to what you’re trying to achieve.”

Wrappers have even changed the way Silicon Valley builds, ushering in the era of vibe-coding. With an app like Cursor, one of the fastest-growing startups ever, anyone can develop an app without a degree or years of coding expertise.

“I love the phrase vibe-coding because, actually, I think it points to … this new way that we’re going to interact with these systems where we’re not necessarily going to interrogate all of what they do in process,” said E14 Fund Managing Partner Calvin Chin. “Over time as the models improve and these products built on top of them improve, we’re going to get other kinds of vibe-activities in the economy. So maybe it’s vibe-lawyering, vibe-accounting, and we’re going to trust the models more and more.”

Watch the video to learn more.

CoreWeave‘s stock sank nearly 10% on Monday, falling well below its initial public offering price.

The artificial intelligence cloud provider sold shares at $40 and the stock opened at $39 in its market debut Friday. Shares closed at $40.

CoreWeave’s offering marked the biggest tech IPO since 2021 and the first pure-play AI company to go public. The initial share sale raised $1.5 billion. It was also the largest U.S. IPO since automation software maker UiPath‘s $1.57 billion debut in 2021.

CoreWeave’s public offering also served as a major test for an IPO market that has largely dried up since early 2022 as inflation and rising interest rates deterred investors from riskier bets.

Many had hoped that President Donald Trump’s victory would usher in a more favorable setup for IPOs, but new tariffs have triggered economic uncertainty and sapped interest in technology stocks. The tech-heavy Nasdaq Composite was down more than 10% year to date. The company, however, joins a growing list of tech-related companies that have recently filed to go public, including Klarna and ticket reseller StubHub.

CoreWeave had initially set its price target on shares at $47 to $55, which would have raised about $2.5 billion at the middle of the range. The company downsized the offering to 37.5 million shares from 49 million.

“There’s a lot of headwinds in the macro,” CoreWeave CEO Michael Intrator said on CNBC’s “Squawk Box” on Friday. “And we definitely had to scale or rightsize the transaction for where the buying interest was.”

CoreWeave rents out access to hundreds of thousands of Nvidia graphics processing units to other large tech and AI companies including Meta, IBM and Cohere. Its most significant customer is Microsoft, which accounted for 62% of the company’s revenue last year. Microsoft, Amazon, Google and Oracle are among the company’s most significant competitors.

The company was originally known as Atlantic Crypto when it was founded in 2017. It previously offered infrastructure for mining the ethereum cryptocurrency but snatched up additional graphics processing units and changed its name and focus toward artificial intelligence as digital asset prices fell.

CoreWeave said revenues grew over 737% last year to $1.92 billion in its prospectus filed earlier this month. The company also reported a net loss of $863 million last year.

— CNBC’s Jordan Novet contributed reporting

Huawei on Monday reported a sharp jump in 2024 revenue as its core telecommunications and consumer businesses accelerated.

Huawei reported revenue for 2024 of 862.1 billion Chinese yuan ($118.2 billion), a 22.4% year-on-year rise.

It is the company’s second-highest revenue figure ever, according to CNBC calculations, just shy of the record 891.4 billion yuan reported for 2020.

Net profit fell, however, to 62.6 billion yuan, a decline of 28% versus 2023. Huawei said this was a result of increasing investments.

It comes as the Chinese technology giant tries to adapt its business to deal with U.S. sanctions that have restricted its access to key technologies like semiconductors.

“In 2024, the entire team at Huawei banded together to tackle a wide range of external challenges, while further improving product quality, operations quality, and operational efficiency,” Huawei’s rotating chairwoman Meng Wanzhou said in the company’s annual report.

Huawei spent 179.7 billion yuan on research and development, equating to 20.8% of its revenue. That’s higher than 2023’s 164.7 billion R&D figure. Huawei has been diversifying its business in areas including data centers for AI, cloud computing and automotive technology.

“Over the next three years, despite an economic downturn, we will increase investment in strategic depth, particularly in building foundational technologies, and seek growth opportunities through differentiation,” Meng said.

Huawei’s sales last year were driven by its two biggest businesses — ICT infrastructure and consumer — which together account for around 82% of the company’s total revenue.

Revenue at the ICT infrastructure division, which includes its carrier business, rose 4.9% year-on-year to 369.9 billion yuan. This is the Shenzhen headquartered-firm’s biggest business by revenue. Huawei is one of the world’s largest telecommunications equipment companies and the company said large-scale deployment of next-generation 5G networks had helped drive growth.

The company also said that 2024 was the first year of commercial deployment of next-generation networks, dubbed 5.5G or 5G advanced, which also helped give sales a boost.

Huawei, once the world’s biggest smartphone player, saw its smartphone business in particular crushed by U.S. sanctions that restricted its access to key chips and Google software.

From the end of 2023, however, a semiconductor breakthrough in China allowed Huawei to regroup and release high-end phones that have sold very well domestically.

In 2024, Huawei’s smartphone shipments in China jumped 37% year-on-year, while its market share rose to 16% from 12% in 2023, according to data from Canalys. This came at the expense of Apple, which saw its market share decline and shipments fall.

Huawei has aggressively launched premium smartphones, including the first-ever trifold handset, and has also begun to slowly relaunch devices overseas.

Meanwhile, Huawei also released HarmonyOS 5 in 2024, the first version of its self-developed mobile operating system that reportedly no longer uses any open-source code from Google Android.

Still, analysts have told CNBC that Huawei’s overseas prospects remain a challenge given its lack of access to Android, which runs on the majority of the world’s smartphones, and continued restrictions in accessing the most cutting-edge chips, such as those found in Apple and Samsung devices.