The AI race is no longer just about who has the biggest model
Companies are quietly moving away from the most powerful AI and toward cheaper, smarter systems that pick the right tool for each job. Here is what that means for you.
Key points
- Perplexity CEO Aravind Srinivas said in May 2025 that "the model alone is no longer the product" as AI companies shift focus to orchestration systems.
- Perplexity this week previewed a new system built around GLM 5.2, an open-weight model from China's Z.ai, designed to use cheaper AI for routine steps and stronger AI only when needed.
- Benchmark venture capital partner Peter Fenton predicted that more than 90 percent of AI-generated tokens, the units of data a model processes and produces, could come from open-weight models within 18 to 24 months.
- Ollama, a company that helps businesses run AI models on their own computers, says more than 85 percent of Fortune 500 companies have adopted its software.
For the past two years, the AI race had a simple scoreboard: whose model was biggest, whose benchmark was best. That scoreboard is getting complicated.
Businesses are no longer just testing AI. They are plugging it into real workflows, and suddenly the question is not "which AI is most powerful?" but "which AI is best for this specific job, at a price that makes sense?"
Think of it like hiring contractors. You would not bring in a specialist architect to hang a shelf. A customer service chatbot does not need the same firepower as a tool debugging complex software. The new generation of AI products is designed to make that call automatically, routing each task to the cheapest model that can handle it.
Perplexity CEO Aravind Srinivas put it plainly to CNBC Tech: "The model alone is no longer the product. It is the harness, the orchestration system that puts the model inside a very capable harness and pairs the model with a lot of tools."
This week Perplexity previewed exactly that kind of system, built around GLM 5.2, an open-weight model from Chinese lab Z.ai. Open-weight means the model's underlying code can be downloaded, customised and run by any company on its own servers, no monthly subscription to a big AI lab required.
That matters because open-weight models are getting genuinely good. Peter Fenton, a general partner at venture capital firm Benchmark, told CNBC he believes more than 90 percent of all AI-generated output could come from open-weight models within two years, possibly by the end of 2025. That would squeeze the profit margins of premium AI providers like OpenAI and Anthropic, which currently charge a mark-up for access to their top-tier models.
What does this mean for ordinary people and small businesses?
It likely means cheaper AI tools, sooner. Jeff Morgan, CEO of Ollama, a company that makes it easier to run AI models on your own hardware rather than in someone else's cloud, says more than 85 percent of Fortune 500 companies already use his software. That includes heavily regulated sectors like aviation, insurance and healthcare, where keeping data in-house is not optional.
If AI work can run locally on a business's own computers, sensitive customer data never has to leave the building. That is a genuine privacy win compared to sending everything to a third-party server.
The catch is geopolitics. Several of the best open-weight models right now come from Chinese labs, including Z.ai and DeepSeek. That makes open-source AI a policy question as much as a technology one, and the debate is only starting.
For now, the practical takeaway is straightforward. Better, cheaper AI is coming to more products. The biggest winners will be the builders who know how to stitch models together cleverly, not just the labs with the largest ones.
