
Cheap, powerful AI models are increasing usage, a bullish sign for the AI boom AI companies have competed on having the best and often most dangerous models for years. Now, theyre pivoting to a new focus: cost. Why it matters: The biggest risk to the AI boom is demand, and recent innovations to make models cheaper while maintaining powerful levels of intelligence have offered a bullish signal.As the prices of top models from OpenAI, Anthropic and others come down, usage is increasing dramatically, a trend that points to the kind of demand that will be necessary to justify trillions of dollars in spending. State of play: Its modelpalooza in the AI world this week, with OpenAI, Anthropic, SpaceX and some Chinese model providers all offering new releases. Most of them are offering shocking levels of intelligence at prices that wouldve been unthinkable just a few months ago.OpenAI is releasing GPT-6 Sol and GPT-6 Luna on Tuesday, which brings down the cost for top business customers by 50 from previous iterations of the same models, the company shared with Axios.Anthropic is releasing Opus 5.5 on Tuesday, which the company says costs around 40 less to run than Opus 5 while maintaining top intelligence. Elon Musks xAI on Monday released Grok 4.7, pitching the new model around price-performance. Yet in a testament to the sheer brutality of competition in the AI race, it only took 24 hours for new options to wipe out much of that price advantage. Threat level: The ferocity and speed of the race during an ongoing price war is an issue for OpenAI and Anthropic, which need to retain customers and revenue growth to justify their sky-high multi-trillion-dollar valuations. Yes, but: Even as they face margin pressure, the trend is positive for the AI boom overall, as the price reductions make it much easier to bet on a bright future for AI use. Follow the money: There is emerging evidence that cost cutting is a rising tide that can lift revenues for all AI providers. In a report sent to clients, Citadel Securities found that falling per-token costs are fueling additional usage, and overall AI spending is increasing. That points to higher eventual profits for labs or any company providing the computing firepower that services AI usage.Morgan Stanley sees competition from Chinese providers as yet another bullish signal for AI because it will just increase overall demand for computing by capturing more customers who can now access AI for less. This concept is referred to in classic economic theory as Jevons Paradox, which holds that when technology brings down the cost of a resource, consumption increases. Between the lines: Open-weight model companies, primarily coming out of China, have been on a tear in recent weeks.DeepSeek this month released V4.1 Flash, which it says beats its previous flagship offering on a number of benchmarks with technical updates that allow the company to charge less for its intelligence.That model is now number one on OpenRouters leaderboard with a 172 spike in usage this week.Reality check: Lowering costs to take market share isnt new in the AI world.AI companies have a long history of releasing a new model and then lowering the cost for prior releases, or even releasing "flash" versions of larger models that are smaller and cheaper to run.But the increased competition from open-weight model providers and their massive rise in leaderboards is fueling a broader focus on cost across offerings from top AI labs.The bottom line: AI sticker shock feels like a distant memory given the massive push from labs to deliver cheaper models.
axios · about 3 hours ago
Georgia Residents Sue Over OpenAI Data Center A $20 billion data center campus announced in July near Rincon, Georgia, is now facing its second lawsuit from Effingham County residents and environmental advocates. OpenAI, best known for creating ChatGPT, is planning a massive campus that would include about 4.4 million square feet of data-center space 30 miles northwest of Savannah. The project, known […]
inside climate news · about 3 hours ago
Microsoft Takes Down EvilTokens Device-Code Phishing Service Tied to 12,000 Inbox Compromises Microsoft on Tuesday announced the takedown of the EvilTokens device code phishing service that it said used artificial intelligence (AI) "at every step of the attack chain."
The action, carried out with authorization from the U.S. District Court for the Eastern District of Virginia, involved the efforts of Health-ISAC, alongside Cloudflare, Coinbase, OpenAI, Railway, SpyCloud, The Shadowserver
the hacker news · about 3 hours ago
Metas AI chief wants Muse to make you $1,000 Alexandr Wang has set Metas new AI agent a simple target. Metas chief AI officer asked on X whether Muse could make you $1000, launching a hashtag challenge a few days after Muse went live on 8 September. The replies have been generous with dollar figures, but not always independent. Many of the posts answering […]
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the next web · about 3 hours ago
The AI boom runs on tens of millions of workers nobody has figured out how to pay, Papaya Global wants to fix that. Ask an AI lab where its workforce is and you get a map, not an address. Researchers in London and Zurich. Engineers in Tel Aviv and Bangalore. Robotics technicians at sites that did not exist a year ago. And underneath all of it, the people who label the data, review the outputs and keep the models […]
This story continues at The Next Web
the next web · about 3 hours ago