Horizontal AI tools compete on feature parity and price. Vertical AI products solve specific problems so well that buyers pay premiums of 5-10x over generalist alternatives.

The economics are straightforward: a radiologist-focused AI tool costs a fraction of what it saves in diagnostic accuracy. A legal AI tool can justify thousands per month because it directly replaces associate hours. The ROI is measurable and immediate.

Horizontal AI is getting commoditized fast. Vertical AI is where the durable revenue is.