What Mac should I buy?

You say that you will be doing software development. You also talk about running a 3D modeling application within a Vmware virtual machine, which suggests that you might be running a Wintel application, within the Intel emulator provided by Windows for ARM, within Windows 11 for ARM, within a virtual machine. Then you mention AI stuff – a third application that might eat RAM like it was going out of style.

Note that regular Intel versions of Windows will not run on M-series Macs – and that neither Microsoft or Apple currently support dual-booting Windows 11 for ARM. You can only run it inside of a virtual machine. This might not be the best environment in which to run demanding Windows/Intel applications – if in doubt, check with the application vendors.

The M1 MacBook Air could be custom-ordered with a maximum of 16 GB of RAM, and stock models had just 8 GB of RAM, which isn't much these days for a development machine. 8 GB of RAM would not really be enough for the above-mentioned uses, and even 16 GB would be rather "iffy".

These days, even Macs with plain M4 chips can be custom-ordered with 32 GB of RAM. You cannot expand RAM on any Apple Silicon Mac after purchase, and my intuition is that you should consider 32 GB as the minimum that you should get on a new machine intended for these applications.

Apple provides some help for choosing a Mac that is appropriate for your tasks.

Mac - Compare Mac Models - Apple

You might ask yourself why your current Mac is getting slower. That's not necessarily a normal thing to happen to such a relatively new Mac.

Are you running any anti-virus, VPN, cleanup, speed-up or other optimizing apps? These are not needed on the Mac and often cause problems. It's advised that you don't install apps like these.

I will mostly use for coding (Matlab//python, maybe c++) and for 3d modeling (Nx Siemens using Vmware) and some Ai use

You have listed several high-demand tasks that will heat up components. A hot Mac can clock back its processor to allow it to cool down. That could be what you are seeing in your current M1.

M-series Macbook Airs have NO cooling fans. They are convection-cooled just like the first iMacs that tended to run hot. Chill pads will not help a lot. For certain, you do not want to be using an external monitor on an M-Macbook Air with the lid closed! The keyboard area is a key escape route for hot air.

The entry-level M4 Macbook Pro 14 has one fan. My M4 Pro Macbook Pro 14 has two fans, and it is the coolest running laptop I have ever used. In addition to better cooling, the Macbook Pro gives you more ports and, with the Pro or Max version, more horsepower.