Palo Alto CEO Says AI Token Costs Must Drop 90% for Enterprise Adoption
Updated
Updated · CNBC · Jul 9
Palo Alto CEO Says AI Token Costs Must Drop 90% for Enterprise Adoption
3 articles · Updated · CNBC · Jul 9
Summary
Nikesh Arora said AI token costs need to fall about 90% within two years for large-scale enterprise adoption, arguing OpenAI’s 54% gain in token efficiency is only a start.
Current pricing is straining corporate AI budgets and making tools harder to deploy broadly, he said, with costs needing to fall to roughly 20% of today’s level within 12 months.
That pressure is pushing some businesses toward cheaper open-weight models, including Chinese offerings that Arora said are rapidly narrowing the gap with U.S. labs.
The warning lands as AI infrastructure spending keeps climbing — SpaceX raised $25 billion last month and Amazon this week sold $25 billion in debt — even as executives argue efficiency gains should eventually rationalize costs.