Palo Alto CEO Arora says AI pricing needs to come down
Palo Alto Networks CEO Nikesh Arora has warned that token costs must fall by up to 90% to encourage large-scale AI adoption.
“I think 54 percent is a good start,” Arora told CNBC’s Seema Mody on “Squawk on the Street” on Thursday. OpenAI CEO Sam Altman told CNBC that the frontier lab’s latest model is 54% more efficient for agency coding. “I think we probably need another twist.”
Arora said token efficiency should drop to 20 percent in the next 12 months and 90 percent next year.
Rising token costs have emerged as a major pain point for businesses, straining AI budgets. He said current pricing makes it increasingly difficult for businesses to implement AI tools.
“We need to see AI prices come down,” Arora said.
Arora is among a growing group of executives pushing for a decline in token pricing. What is worrying is that high token costs are a major barrier to widespread adoption, preventing many businesses from using the tools.
Last week, palantir CEO Alex Karp blasts the token model used anthropic and named OpenAI and open-weighted models as a potential solution.
“I’m not throwing shade at them, but something went completely wrong,” he told CNBC’s “Squawk Box.” “The basic view among businesses in this country is I’m going to rest and waste my time on tokens.”
The token problem is driving many businesses to implement cheaper open-weight tools, including Chinese models that are quickly closing the gap with American laboratories.
At the same time, AI spending is accelerating to new highs to power massive infrastructure buildout. Technology giants are also looking for new ways to finance these artificial intelligence investments. SpaceX We raised $25 billion from a bond sale last month. Amazon It raised $25 billion in debt this week.
Arora said the market will start coming to terms with spending or businesses will adjust to the market. As technology becomes more efficient, budgets will decrease.
“It’s important to understand that demand continues to be infinite, and as long as you have an infinite demand curve that you’re facing, I think all of this will rationalize over time,” he said.
