AI is getting cheaper, but your computer is getting more expensive: How OpenAI and Anthropic started a price war

In September, the AI market saw a significant shift as OpenAI and Anthropic released new models with significantly lower usage costs than their predecessors. Simultaneously, DeepSeek introduced cached input pricing at $0.003 per million tokens. The article analyzes how this price reduction is driven not only by engineering innovations, such as KV-cache optimization and improved model efficiency, but also by shifts in the financial models for computing power. Despite the falling cost of AI services, hardware prices—including DDR5 RAM and H100 GPU rentals—continue to rise. The piece examines the drivers behind this price war, the impact on the open-weights ecosystem, and the current state of high-performance hardware availability. The article provides a deep dive into the economics of the modern AI industry and how companies are balancing lower user costs with rising infrastructure expenses.