Our LLM Token index continues to decline while the debate over open vs closed model rages on. So we decided to take a closer look at how closed and open models respectively contributed. Interestingly, we are seeing some convergence btwn them. The effective prices paid for proprietary models have decreased sharply over the last few weeks as OpenAI releases powerful frontier models at lower prices. Open models otoh have in fact seen their effective prices increase as more powerful near-frontier Chinese models like GLM 5.2 and Kimi K3 are released and served at higher prices. Overall, this should be unsurprising. Econ 101: competition is up and prices are down. This is good for consumer and enterprise users of AI (agents) and promotes much wider and faster AI adoption.

Indeed. Just as a reminder that Amazon had negative cash flow for three years to 2003 as well (perhaps foolishly per the below argument.) 1998 to 1999 saw a 400% reduction in cash flow, roughly 4x the drop seen in the past 12 months.

DeepSeek Kill Zone. Models that are inferior and significantly more expensive should cut spending and be in survival mode ASAP. Models that are superior but also more expensive or slightly inferior but with comparable pricing can survive a bit longer.

The GenAI economy has generated $110 billion in sales over the past 12 months. It is growing fast. On an annualized basis, the revenue run rate exceeds $175 billion. These numbers took us several months to construct, and as far as we know, it’s the first bottom-up, deduplicated measure of consumer and enterprise AI spending across the full stack. We are releasing this research today in our first The State of the AI Economy report.