Generative AI Investment Trends: Shift Towards Application Layer Startups in 2024

In 2024, investor focus in generative AI is shifting from foundational model companies to application-layer startups. This pivot is driven by the dominance and high costs of foundational models and the growing demand for tailored AI applications. Significant funding rounds for startups like Perplexity AI and Magic AI highlight this trend. These startups, leveraging third-party foundational models, offer specialized solutions, making them attractive investment opportunities despite having smaller market potentials compared to foundational model firms.