China’s AI models spooked Wall Street. But they may turbocharge industry growth

China's open-weight AI models have triggered a price war, with large-language model inference prices per million tokens falling from above US$2 at the start of June to US$1.2 this week, according to Silicon Data's LLM Token Expenditure Index. OpenAI responded by cutting developer pricing for its GPT-5.6 Luna model by 80% and for GPT-5.6 Terra by 20%. Analysts argue that despite spooking US investors and causing a severe AI stock sell-off, the plummeting costs will turbocharge global AI demand and adoption.

China’s AI models spooked Wall Street. But they may turbocharge industry growth China’s open-weight models have led AI firms to slash prices, but they will also massively boost overall AI demand, analysts say Breakthroughs in cheap Chinese open-weight artificial intelligence models have spooked US investors, but analysts argue plummeting model costs will benefit the AI industry in the long run by supercharging global demand for AI systems. Companies across the AI industry have slashed prices in recent weeks, with large-language model LLM inference prices per million tokens falling from above US$2 at the start of June to just US$1.2 this week, according to research firm Silicon Data’s LLM Token Expenditure Index, which tracks both frontier providers and open-weight platforms. announced an 80 per cent discount https://www.scmp.com/tech/tech-trends/article/3362568/openai-blinks-face-chinese-rivals-drops-pricing-some-models-80?module=inline&pgtype=article on developer pricing for its lightweight GPT-5.6 Luna model, and a 20 per cent discount on the mid-tier GPT-5.6 Terra. severe AI stock sell-off https://www.scmp.com/tech/tech-trends/article/3362574/how-sell-flashy-ai-focused-us-hedge-fund-wake-call-chinese-investors?module=inline&pgtype=article last month, amid investor concerns that US hyperscalers were overvalued. But analysts say the intense competition will benefit the AI industry in the long run. “Competition is up and prices are down,” Silicon Data wrote on social media platform X on Wednesday. “This is good for consumer and enterprise users of AI agents and promotes much wider and faster AI adoption.”