AI Cost Crisis: Intelligence Prices Are Crashing Faster Than Moore’s Law

The economic foundation of the artificial intelligence industry is shifting beneath its feet. A striking new report from AI research firm Epoch AI reveals that the cost of artificial intelligence is crashing at an unprecedented velocity, drastically outpacing historical technology benchmarks including Moore’s Law, lithium batteries, and DNA sequencing.

According to the findings, the cost of AI intelligence is dropping by just under 50% every single quarter, compounding to become roughly 13 times cheaper each year. Researchers note that the price of artificial intelligence has plummeted by hundreds of thousands of times within a mere five-year window, creating a deflationary spiral unlike anything seen in modern technological history.

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To contextualize the collapse, Epoch AI compared the trajectory of AI against other twentieth-century technological marvels. While lithium batteries took over two decades to fall 100 times in price, and DNA sequencing took roughly 20 years to achieve massive cost reductions, artificial intelligence has replicated and exceeded those drops in a fraction of the time—accelerating four times faster than DNA sequencing and 18 times faster than lithium batteries.

While these plunging costs are a massive win for end-users and enterprise adoption, they present a severe economic conundrum for frontier AI labs like OpenAI and Anthropic. With capabilities improving and prices dropping every few weeks or months, companies face brutal market dynamics. Maintaining long-term customer loyalty and securing sustainable profit margins becomes nearly impossible when any competitive advantage is bound to be fleeting and undercut by the next cheap update.

Source: Original Coverage