{"slug": "palo-altos-ceo-says-ai-prices-must-fall-90-before-the-tech-really-takes-off", "title": "Palo Alto’s CEO says AI prices must fall 90% before the tech really takes off", "summary": "Palo Alto Networks CEO Nikesh Arora told CNBC that AI token prices must fall by as much as 90% before large-scale enterprise adoption becomes affordable, calling OpenAI's 54% efficiency gain in GPT-5.6 a good start but insufficient. Arora argued that demand is infinite and costs will rationalize over time, reflecting a paradox where per-token prices have collapsed but total enterprise AI bills keep rising due to agentic usage.", "body_md": "#### TL;DR\n\nPalo Alto Networks CEO Nikesh Arora told CNBC that AI token prices need to fall by as much as 90% for large-scale enterprise adoption, calling OpenAI’s 54% GPT-5.6 efficiency gain “a good start” but not enough. He argued demand is “infinite” and costs will “rationalize over time.” His plea reflects a real paradox: per-token prices have collapsed while total enterprise AI bills keep rising, driven by agentic usage.\n\nPalo Alto Networks chief executive Nikesh Arora says the cost of running AI needs to plunge before businesses can deploy it at scale. He told CNBC on Thursday that token prices may need to fall by as much as 90%, [according to CNBC](https://www.cnbc.com/2026/07/09/palo-alto-ceo-arora-ai-pricing.html).\n\nArora was reacting to OpenAI’s claim that its new GPT-5.6 model is 54% more token-efficient on agentic coding. “I think 54% is a good start,” he said, making clear it is nowhere near enough.\n\nHe wants the trend to continue, with efficiency improving further over the next year and dramatically more the year after. Only then, in his telling, does mass enterprise adoption become affordable.\n\nDespite the sticker shock, Arora is not bearish on demand. “The demand continues to be infinite,” he said, arguing that with an infinite demand curve, costs “will rationalize over time”.\n\nHis logic is that the market will either grow into the spending or force prices down. Budgets should ease, he suggested, as the underlying technology becomes more efficient.\n\n### The paradox behind the plea\n\nArora’s complaint captures a genuine puzzle in enterprise AI. Per-token prices have collapsed, yet total bills keep climbing, so much so that [prices fell 98% while enterprise AI bills tripled](https://thenextweb.com/news/token-prices-fell-98-enterprise-ai-bills-tripled-now-the-industry-wants-a-standards-body-to-explain-why).\n\nThe culprit is agentic AI, which calls a model over and over to complete a task. A single ambitious project can burn through a fortune, as one developer’s agents [ran up a $1.3m token bill in a month](https://thenextweb.com/news/openclaw-peter-steinberger-1-3-million-openai-token-bill).\n\nThat is why cheaper headline prices do not automatically translate into lower costs. Usage grows faster than prices fall, and the bill goes up anyway.\n\n### Squeezed buyers and a price war\n\nThe strain is already changing behaviour, with some firms [capping how much AI staff can use](https://thenextweb.com/news/tokenminimizing-companies-cap-employee-ai-spending) as costs bite. Arora is voicing, from the buyer’s seat, a frustration many enterprises share.\n\nThe good news for him is that a price war is under way, with [DeepSeek making a 75% discount permanent](https://thenextweb.com/news/deepseek-v4-pro-75-percent-price-cut-permanent) and rivals racing to match. A wave of startups is also [chasing cheaper inference](https://thenextweb.com/news/sail-research-80m-ai-agent-inference) to squeeze more output from every chip.\n\nWhether that adds up to Arora’s 90% is another matter, since efficiency gains can be swallowed by ever-heavier usage. His bet is that scale eventually wins, and the economics settle.\n\nFor now, the man running a cybersecurity giant is effectively telling AI vendors their product is still too expensive to use everywhere he wants to use it. Coming from a customer of that size, it is a message the model makers will hear.", "url": "https://wpnews.pro/news/palo-altos-ceo-says-ai-prices-must-fall-90-before-the-tech-really-takes-off", "canonical_source": "https://thenextweb.com/news/palo-alto-arora-ai-token-pricing-must-fall", "published_at": "2026-07-09 18:15:32+00:00", "updated_at": "2026-07-09 19:09:54.832610+00:00", "lang": "en", "topics": ["artificial-intelligence", "ai-agents"], "entities": ["Palo Alto Networks", "Nikesh Arora", "CNBC", "OpenAI", "GPT-5.6", "DeepSeek"], "alternates": {"html": "https://wpnews.pro/news/palo-altos-ceo-says-ai-prices-must-fall-90-before-the-tech-really-takes-off", "markdown": "https://wpnews.pro/news/palo-altos-ceo-says-ai-prices-must-fall-90-before-the-tech-really-takes-off.md", "text": "https://wpnews.pro/news/palo-altos-ceo-says-ai-prices-must-fall-90-before-the-tech-really-takes-off.txt", "jsonld": "https://wpnews.pro/news/palo-altos-ceo-says-ai-prices-must-fall-90-before-the-tech-really-takes-off.jsonld"}}