CEOs go bargain hunting for AI
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
Corporations are looking to offload AI tasks to cheaper models as usage blows out IT budgets and returns on investment haven't solidified.
Why it matters: The search for cheaper subscriptions could threaten the three biggest AI labs' near trillion-dollar valuations right as they near record IPOs.
Driving the news: Anthropic raised $65 billion in its latest funding round, pushing its valuation to $965 billion Thursday and eclipsing OpenAI's latest valuation of $730 billion.
- This comes as executives are telling Axios they're increasingly concerned about their AI bills. Some are closely monitoring usage or even switching to cheaper models to keep costs down.
- That tension could pressure the revenue projections of these AI companies just as they're expected to go public.
What they're saying: "There are many tasks you don't need [Claude's] Opus for," Matan Grinberg, CEO at Factory, whose proprietary router selects the most cost-effective AI model for each query and task, told Axios.
- Clients are "being much more surgical" about AI usage, said Eric Yunag, EVP at Convergint, a tech security firm.
- Others are switching to open-source models or agents built for specific use cases, which are often cheaper and better performing, Ali Ansari, CEO of model training firm Micro1, told Axios.
Follow the money: Grinberg said his customers are "really scared" of committing to a single vendor. "No one wants to standardize on OpenAI, or just Anthropic or just Google," because they don't want to be subject to "price gouging" down the line.
- Open model use at Factory has tripled in the last month relative to closed models, like those offered by OpenAI and Anthropic, which can be more expensive.
Yes, but: Once you have skills and tasks set up within one AI platform, it can be hard to switch to another one, even if the monthly IT bills are painful.
- And enterprise revenue for the frontier AI labs continues to tick higher.
The bottom line: Just as Anthropic is on pace to top $47 billion in annual revenue, its customers are searching for cheaper alternatives.
