Expensive AI binge leaves companies balking at soaring bills

Artificial intelligence is getting expensive — and companies are starting to rethink their embrace of the disruptive technology. Playing by a well-worn Silicon Valley playbook, AI companies charged rock-bottom prices to hook customers after ChatGPT burst onto the scene. Kevin Simback of startup incubator Delphi Labs calls it the era of “subsidised intelligence” — meaning investors were basically footing the bill so companies could offer AI on the cheap. “But the tides are beginning to turn,” Simback warned and an era where the big AI companies actually need to make money has begun — with leaders OpenAI and Anthropic looking to go public and attract main street investors later this year. Prices are rising across the board, and one big reason is AI agents . Unlike a chatbot that just answers questions, agents actually do things — book appointments, write code, manage files. And they’re expensive to run, because one task can spin up dozens of agents all working at once, each racking up charges. Those charges are measured in tokens — the basic unit AI companies use to bill customers. A single agent-powered task can burn through dozens of times’ more tokens than a simple chat message. Meanwhile, the computer chips and data centres needed to power all this AI can’t keep up with demand, creating computing shortages and adding further uncertainty to the nascent industry. “Especially in developer circles, the cost to use AI for things like coding has grown exponentially,” said Mark Barton of tech consultancy Omniux. “All the costs are really starting to skyrocket.” Some companies have been so eager to use AI that they’ve gone overboard in a usage binge called “tokenmaxxing”. “In some cases, people are seeing the cost of tokens exceed the cost of the employee within a month or two of use, just because they’re using it too much,” says analyst Jack Gold of J.Gold Associates. Sm...

Original source: Dawn Pakistan