- AI token prices have fallen more than 50% since summer, with the LLM Token Expenditure Index hitting a record low of 97 cents
- Cheaper open-source rivals like Moonshot’s Kimi K3 and OpenAI GPT-5.6 price cuts are driving the decline
- The price drop squeezes AI companies’ pricing power as Anthropic and OpenAI prepare for potential IPOs
- The decline is impacting broader tech markets, with the Nasdaq falling nearly 1% and S&P 500 down 0.4%
The LLM Token Expenditure Index, a key measure of Artificial Intelligence token prices tracked by Silicon Data, fell to 97 cents on Monday, marking its lowest reading since launching last year as competition intensifies across the market. AI token prices have declined more than 50% since summer, with cheaper open-source rivals such as Moonshot’s Kimi K3 and price cuts on OpenAI‘s GPT-5.6 models pushing rates lower.
Charles-Henry Monchau, investing chief at Syz Group, said: “Foundation model labs are the most directly exposed. Token deflation compresses the revenue line while compute commitments stay fixed.” Falling AI token prices mean lower costs for users running ChatGPT, Claude, or Gemini, but they squeeze the pricing power of the companies behind those models.
Anthropic and OpenAI each confidentially filed for IPOs with regulators this summer, and the prolonged slide in artificial intelligence token prices could shape how the market values those offerings. Steve Hou, head of research at Silicon Data, has pointed to the drop as a sign that supply may already meet demand for most AI tasks.
If that holds, further declines seem more likely than a rebound, keeping the AI token market under pressure. The continued drop is also forcing investors to reconsider the returns on the huge sums companies are pouring into AI infrastructure.
Mega-cap tech companies including NVIDIA and Microsoft have committed billions of dollars to expanding AI capabilities, and as AI token prices fall further, investors are questioning those bets since cheaper tokens can mean thinner returns on compute infrastructure. The pressure is not staying contained to AI companies and is starting to Ripple through the broader market.
Technology stocks led the wider market lower on Tuesday, with the Nasdaq Composite sliding nearly 1% and the S&P 500 ticking down 0.4%.
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