Silicon Valley’s powerful and pricey AI models have been a necessity for businesses looking to future-proof themselves. But now a growing number of tech CEOs are arguing that cheaper options would be crucial for their wider adoption. Top executives such as Microsoft’s Satya Nadella, Palo Alto Networks’ Nikesh Arora, and Coinbase Global’s Brian Armstrong have said that smaller, cheaper models can handle a large share of corporate needs. This view is the result of a reassessment within com
in companies that, until recently, encouraged heavy use of AI tools, often treating rising consumption as a proxy for productivity, a practice dubbed “tokenmaxxing”. Now, those bills are starting to bite.
Prices of tokens – the units used to measure AI usage – are falling, but the cost of completing a task is rising as AI firms shift from flat subscriptions to usage-based pricing. That leaves companies with unpredictable, often higher bills as usage per task becomes harder to estimate.
Uber, for instance, burned through its entire 2026 AI budget in just four months after employees rushed to adopt AI coding tools, forcing management to cap usage, according to reports.
“Changing the license model caught a lot of people by surprise,” said Harold Byun, CEO of BlueRock, a startup that helps companies run AI systems safely. “Immediately after that, we had a number of reports from customers that we’re seeing a 20 per cent to 30 per cent spike in terms of over-budgeting.”
Businesses fret over huge bills
As companies use AI more, their costs are surging beyond initial estimates as tasks now involve more steps, more data and longer inputs.
Gartner estimates AI coding costs will surpass the average developer’s salary by 2028, while a survey by the research firm found that three-quarters of executives see tech budgets rising this year, with nearly half projecting double-digit jumps.
That has led businesses to embrace cheaper models and turn to routing tools such as OpenRouter, an AI marketplace, to assign tasks to the most cost-effective system while reserving premium models for complex work, such as coding.
Open-source tokens processed on OpenRouter jumped to 65 per cent in June from 34 per cent in January, according to a Citi note.
That should benefit open-source model makers such as China’s DeepSeek, which have won wide adoption among startups but struggled to break into large businesses due to security concerns.
“If you want to win enterprise, you should be forward pricing tokens,” Palo Alto Networks’ Arora wrote on X last week, urging AI labs to charge customers today at the lower rates that tokens are expected to command in a few years.
OpenAI appears to be adjusting to the shift. The maker of ChatGPT has reportedly been weighing significant price cuts, including on token usage, in anticipation of similar moves from rival Anthropic.
However, any shift to cheaper models could hurt their revenue growth, especially as they prepare for potential IPOs.
“There will be a price-war dynamic when it comes to OpenAI and Anthropic as they both duke it out for a ‘first to public market’ IPO dates,” said Christopher Brown, financial adviser in private wealth management at Synovus Securities, which owns shares in several Big Tech companies.
Tech stocks sold off for much of last week as investors reassessed AI valuations amid doubts about returns on massive spending, a weak post-IPO debut for SpaceX, and reports that OpenAI may delay its listing.
Open source, Chinese models draw attention
The cost spike is pushing more businesses toward open-source models, including cheaper Chinese alternatives. The four most popular models on OpenRouter are all Chinese, with DeepSeek at the top.
Chinese models are closing the capability gap with top US models while charging as little as 18 cents per million tokens, compared with an average of $4 for top models, the Citi note showed.
“They (open-source models) used to be more than a year behind (leading AI models). Now, probably the estimates are they’re roughly four months behind. That gap will continue to close,” BlueRock’s Byun said.
Still, some analysts said that concerns about the security of Chinese models were likely to hamper enterprise adoption, especially in sensitive industries such as cybersecurity.
Instead, they expect businesses to follow the cloud computing playbook, spreading across multiple providers in search of the best fit and price.
Open-source models are showing that they are “90 per cent as good at 10 per cent of the price,” said Val Bercovici, chief AI officer at WEKA, which helps companies run AI models faster and cheaper. “We don’t need to spend the premium tokens on every level of effort.”
Reporting by Aditya Soni in Bengaluru. Editing by Sayantani Ghosh and Arun Koyyur. All courtesy of Reuters.
Further reading: OpenAI to scale back plans to integrate travel bookings in ChatGPT
