palo alto networks CEO Nikesh Arora warned that token costs need to fall by as much as 90% to facilitate large-scale adoption of artificial intelligence.
“I think 54% is a good start,” Arora told Seema Modi on CNBC’s “Squawk on the Street” on Thursday. OpenAI CEO Sam Altman told CNBC that Frontier Labs’ latest model is 54% more token efficient for agent coding. “Maybe we need another twist.”
Arora said the token’s efficiency should drop by up to 20% over the next 12 months and 90% by next year.
Rising token costs have emerged as a major pain point for enterprises, putting a strain on AI budgets. He said current pricing makes it increasingly difficult for companies to adopt AI tools.
“We need to see the price of AI come down,” Arora said.
Arora is part of a growing group of executives advocating for lower token prices. The concern is that high token costs will be a major barrier to widespread adoption, leaving many companies unable to use the tool.
last week, Palantir CEO Alex Karp criticized the token model used by the company. human and OpenAI call the open weight model a potential solution.
“I’m not throwing shade at them, but something is completely wrong,” he told CNBC’s “Squawk Box.” “The basic idea of companies in this country is, I’m going to sit back and waste my time with tokens.”
The token issue has led many companies to introduce cheaper open weight tools. That includes Chinese models that are rapidly closing the gap with U.S. labs.
At the same time, spending on AI is accelerating to new heights to facilitate the construction of large-scale infrastructure. Big tech companies are also exploring new ways to fund these AI investments. space x Last month, it raised $25 billion in bond sales. Amazon It raised $25 billion in debt this week.
Arora said either the market will start accepting the spending or companies will start adapting to the market. As technology becomes more efficient, so do budgets.
“It’s important to understand that demand continues to be infinite, and as long as we’re facing an infinite demand curve, I think all of this will rationalize over time,” he said.
