State of AI: Bi-Annual Snapshot
The Execution Era of AI
1. Differentiation Has Moved to the Application Layer
2. Multi-Model Architectures Are Becoming the Standard, Driven by Cost and Control
3. Signals of AI Monetization Evolving, But No Final Answer
4. AI Is Acting as a Force Multiplier Across Organizations
5. The AI Tooling Ecosystem Is Maturing
Over the past six months, the AI market has shown signs of entering a new phase of maturity.
What started as the race to experiment with large models and launch early AI features has increasingly evolved into a challenge of scaling AI into durable, economically sound products.
Drawing on survey data from ~300 executives building AI products, alongside deep operating insights from the ICONIQ Community, our bi-annual State of AI report captures how companies building AI products are navigating this transition, from model strategy and product differentiation to agentic workflows and monetization.
Across the data, in our view, one pattern is unmistakable. While AI is now embedded in many product roadmaps and organizations, outcomes are diverging. The advantage is accruing to teams that can scale AI into production reliably, manage costs thoughtfully, and integrate it deeply into workflows that matter.
The takeaway to us is clear: AI leadership in 2026 will be defined by disciplined execution across product, cost, trust, and go-to-market.
1. Differentiation Has Moved to the Application Layer
A strong signal is the decisive shift of our respondents away from model-level differentiation.
~70% of builders are focused on vertical AI applications, making application-layer products the most commonly reported AI product among AI offerings.
49% of companies report their primary differentiation comes from application-layer innovation (UX, workflows, integrations, data application), compared to a small minority (14%) relying primarily on proprietary model development.
As base models evolve and become more interchangeable, we believe a competitive advantage is increasingly accruing to companies that deeply understand customer workflows and embed AI directly into mission-critical processes. Model ownership appears to matter far less than product experience and distribution.
.png)
2. Multi-Model Architectures Are Becoming the Standard, Driven by Cost and Control
AI builders are increasingly converging on multi-model strategies to manage tradeoffs between performance, cost, latency, and customization.
Model reliability and accuracy remain the top selection criteria, but cost ranks second, reinforcing what we view as the shift toward cost-efficient stacks.
Builders now use ~3.1 model providers on average, up from ~2.8 six months prior, signaling increasing architectural diversification.
Perspectives shared by the ICONIQ Community support that many companies are routing the majority of workloads to smaller or fine-tuned models, escalating only high-complexity tasks to frontier models. This orchestration approach is increasingly tied to margin outcomes, as the companies surveyed expect gross margins to continue improving, reaching ~52% on average in 2026.
3. Signals of AI Monetization Evolving, But No Final Answer
AI pricing remains an unsettled dimension across the market.
58% of companies still include a subscription or platform component, but consumption-based (35%) and outcome-based (18%) pricing have grown meaningfully over the last six months.
37% of companies plan to change their AI pricing model in the next 12 months, driven primarily by customer demand, competitive pressure, and margin concerns.
Notably, companies experimenting with outcome-based pricing most often tie outcomes to cost savings (36%) or revenue generated (18%), underscoring that monetization is increasingly linked to demonstrable business value rather than feature access alone.
Across the data and interviews, hybrid models (light platform fees plus usage, with safeguards like annual commitments and tiered overages) are emerging as the recommended pragmatic approach amid stabilizing AI economics and customer value curves.
4. AI Is Acting as a Force Multiplier Across Organizations
Internal AI adoption is moving beyond experimentation, with respondents reporting measurable productivity gains across functions.
R&D teams tend to lead adoption rates, with 60% of employees actively adopting AI tools within the function. Use cases such as coding assistance, testing, documentation, and content generation show the highest reported productivity improvements, often exceeding 30 - 40% time savings. However, integration with existing workflows and accuracy of AI models remain top challenges when adopting AI for internal use cases, highlighting the importance of both model selection and change management to accelerate adoption.
As adoption matures, companies are spending a higher percentage of revenue on internal AI tools and measuring ROI through productivity gains, cost savings, and revenue uplift.
Importantly, AI has not yet driven significant reductions in headcount; instead, it seems to be reshaping workforce composition. Companies are prioritizing AI-fluent talent while de-emphasizing administrative and repetitive roles. The data suggests that internal AI is becoming a force multiplier for existing teams, rather than a near-term lever for workforce reduction.
5. The AI Tooling Ecosystem Is Maturing
We surveyed hundreds of companies to understand which tools companies are using for AI product development.
Below, you’ll find a quick tour of the tools most widely reported, listed in alphabetical order.3 If you’re building something different or doubling down on a rising alternative, we’d love to hear from you: ICONIQGrowthInsights@iconiqcapital.com.
.png)
1. Perspectives from the ICONIQ GenAI Surveys (April 2025 & December 2025) and perspectives from the ICONIQ team and network of AI leaders consisting of our community of CIO/CDOs overseeing AI initiatives in enterprises, CTOs, our Technical Advisory Board, and others in our network
2. Survey responses include some but not all ICONIQ Venture and Growth portfolio companies as well as companies not part of ICONIQ Venture and Growth’s portfolio. Please refer to the full report for additional information here.
3. Tools shown here represent most commonly used developer tools as selected by survey respondents as of Dec 2025, limited to those chosen by above 2% of total respondents.
Disclaimer
The views expressed in this presentation are those of ICONIQ Venture & Growth ("ICONIQ" or the "firm"), are the result of proprietary research, may be subjective, and may not be relied upon in making an investment decision.
This presentation is for general information purposes only and does not constitute investment advice. This presentation must not be relied upon in connection with any investment decision. The information in this presentation is not intended to and does not constitute financial, accounting, tax, legal, investment, consulting or other professional advice or services. Nothing in this presentation is or should be construed as an offer, invitation or solicitation to engage in any investment activity or transaction, including an offer to sell or a solicitation of an offer to buy any securities which should only be made pursuant to definitive offering documents and subscription agreements, including without limitation, any investment fund or investment product referenced herein.
Any reproduction or distribution of this presentation in whole or in part, or the disclosure of any of its contents, without the prior consent of ICONIQ, is strictly unauthorized.
This presentation may contain forward-looking statements based on current plans, estimates and projections. The recipient of this presentation ("you") are cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. The numbers, figures and case studies included in this presentation have been included for purposes of illustration only, and no assurance can be given that the actual results of ICONIQ or any of its partners and affiliates will correspond with the results contemplated in the presentation. No information is contained herein with respect to conflicts of interest, which may be significant. The portfolio companies and other parties mentioned herein may reflect a selective list of the prior investments made by ICONIQ.
Certain of the economic and market information contained herein may have been obtained from published sources and/or prepared by other parties. While such sources are believed to be reliable, none of ICONIQ or any of its affiliates and partners, employees and representatives assume any responsibility for the accuracy of such information.
All of the information in the presentation is presented as of the date made available to you (except as otherwise specified), and is subject to change without notice, and may not be current or may have changed (possibly materially) between the date made available to you and the date actually received or reviewed by you. ICONIQ assumes no obligation to update or otherwise revise any information, projections, forecasts or estimates contained in the presentation, including any revisions to reflect changes in economic or market conditions or other circumstances arising after the date the items were made available to you or to reflect the occurrence of unanticipated events.
For avoidance of doubt, ICONIQ is not acting as an adviser or fiduciary in any respect in connection with providing this presentation and no relationship shall arise between you and ICONIQ as a result of this presentation being made available to you.
ICONIQ is a diversified financial services firm and has direct client relationships with persons that may become limited partners of ICONIQ funds. Notwithstanding that a person may be referred to herein as a "client" of the firm, no limited partner of any fund will, in its capacity as such, be a client of ICONIQ. There can be no assurance that the investments made by any ICONIQ fund will be profitable or will equal the performance of prior investments made by persons described in this presentation.
Any information in this presentation is directed at, and intended for, only persons who are experienced institutional or professional investors (“professional investors”) as defined by applicable law and regulation. Any person that is not a professional investor is not an intended recipient of this presentation and the matters discussed herein.
ICONIQ is a trading name of certain ICONIQ Partners (UK) LLP. ICONIQ Partners (UK) LLP (Registration Number: 973080) is an appointed representative of Kroll Securities Ltd. (Registration Number: 466588) which is authorised and regulated by the Financial Conduct Authority. ICONIQ Partners (UK) LLP is a limited liability partnership whose members are ICONIQ Capital (UK) Ltd, Seth Pierrepont and Lou Thorne, and it is registered in England and Wales and has its registered office at 27 Soho Square, London W1D 3QR. ICONIQ Partners (UK) LLP acts as an adviser to ICONIQ Capital LLC
Unless otherwise indicated, the views expressed in this presentation are those of ICONIQ Venture and Growth (“ICONIQ" or the “Firm"), are the result of proprietary research, may be subjective, and may not be relied upon in making an investment decision. Information used in this presentation was obtained from numerous sources. Certain of these companies are portfolio companies of ICONIQ Venture and Growth. ICONIQ Venture and Growth does not make any representations or warranties as to the accuracy of the information obtained from these sources.
This presentation is for general information purposes only and does not constitute investment advice. This presentation must not be relied upon in connection with any investment decision. The information in this presentation is not intended to and does not constitute financial, accounting, tax, legal, investment, consulting or other professional advice or services. Nothing in this presentation is or should be construed as an offer, invitation or solicitation to engage in any investment activity or transaction, including an offer to sell or a solicitation of an offer to buy any securities which should only be made pursuant to definitive offering documents and subscription agreements, including without limitation, any investment fund or investment product referenced herein.
Any reproduction or distribution of this presentation in whole or in part, or the disclosure of any of its contents, without the prior consent of ICONIQ, is strictly unauthorized.
This presentation may contain forward-looking statements based on current plans, estimates and projections. The recipient of this presentation ("you") are cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. The numbers, figures and case studies included in this presentation have been included for purposes of illustration only, and no assurance can be given that the actual results of ICONIQ or any of its partners and affiliates will correspond with the results contemplated in the presentation. No information is contained herein with respect to conflicts of interest, which may be significant. The portfolio companies and other parties mentioned herein may reflect a selective list of the prior investments made by ICONIQ.
Certain of the economic and market information contained herein may have been obtained from published sources and/or prepared by other parties. While such sources are believed to be reliable, none of ICONIQ or any of its affiliates and partners, employees and representatives assume any responsibility for the accuracy of such information.
All of the information in the presentation is presented as of the date made available to you (except as otherwise specified), and is subject to change without notice, and may not be current or may have changed (possibly materially) between the date made available to you and the date actually received or reviewed by you. ICONIQ assumes no obligation to update or otherwise revise any information, projections, forecasts or estimates contained in the presentation, including any revisions to reflect changes in economic or market conditions or other circumstances arising after the date the items were made available to you or to reflect the occurrence of unanticipated events. Numbers or amounts herein may increase or decrease as a result of currency fluctuations.
For avoidance of doubt, ICONIQ is not acting as an adviser or fiduciary in any respect in connection with providing this presentation and no relationship shall arise between you and ICONIQ as a result of this presentation being made available to you.
ICONIQ is a diversified financial services firm and has direct client relationships with persons that may become limited partners of ICONIQ funds. Notwithstanding that a person may be referred to herein as a "client" of the firm, no limited partner of any fund will, in its capacity as such, be a client of ICONIQ. There can be no assurance that the investments made by any ICONIQ fund will be profitable or will equal the performance of prior investments made by persons described in this presentation.
Any information in this presentation is directed at, and intended for, only persons who are experienced institutional or professional investors (“professional investors”) as defined by applicable law and regulation. Any person that is not a professional investor is not an intended recipient of this presentation and the matters discussed herein.
ICONIQ is a trading name of ICONIQ Partners (UK) LLP. ICONIQ Partners (UK) LLP (Registration Number: 973080) is an appointed representative of Kroll Securities Ltd. (Registration Number: 466588) which is authorised and regulated by the Financial Conduct Authority. ICONIQ Partners (UK) LLP is a limited liability partnership whose members are ICONIQ Capital (UK) Ltd, Seth Pierrepont and Lou Thorne, and it is registered in England and Wales and has its registered office at 27 Soho Square, London W1D 3QR. ICONIQ Partners (UK) LLP acts as an adviser to ICONIQ Capital LLC