The Second-Order Effects of Cheaper Tokens

Hyperscaler capital expenditure guidance is the single most useful signal we get each quarter. When three of the largest cloud providers all raise their spending outlook in the same breath and attribute it to AI demand, that is not marketing; that is a multi-year commitment to build physical infrastructure that has to be paid back.

Open-weight models keep closing the distance to the closed frontier, and each release compresses the premium that proprietary providers can charge. That does not erase the moat — the frontier still leads on the hardest tasks — but it caps how much of the market the leaders can defend at the low and middle tiers.