Inference Costs Are Falling Faster Than Anyone Predicted

When a lab ships a new frontier model, the interesting question is rarely whether the benchmark went up. It is whether the price-performance curve shifted enough to unlock a category of application that was previously uneconomical. Watch the pricing page, not the leaderboard.

The bull case for the capex supercycle rests on durable demand and expanding use cases; the bear case rests on the possibility that a great deal of this spending is defensive, undertaken because no incumbent can afford to be the one that under-invested. Both can be true at once, and the timing of the reckoning is the whole game.

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.