Cathie Wood, CEO of ARK Invest, highlights that the average price per million tokens for large language models has dropped from $2.07 to $1.02, a decline of more than 50% that occurred in a matter of weeks. This price drop results from OpenAI’s aggressive price cuts and competition from open-source alternatives like DeepSeek and Kimi, which offer models at a fraction of traditional competitors’ costs. Wood describes this dynamic as a virtuous cycle: lower prices attract more users, generate more data and revenue, which funds further development and pushes prices even lower. Her deflationary thesis on AI dates back to 2021 and now appears to be validated. This price compression makes previously uneconomical use cases viable for enterprises.
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