Firms spent heavily on AI. Now rising costs are outpacing its value

Firms spent heavily on AI. Now rising costs are outpacing its value

All this artificial intelligence spending was showing no noticeable increase in productivity, Uber’s chief operating officer says

AI is getting expensive – and companies are starting to rethink their embrace of the disruptive technology.

Playing by a well-worn Silicon Valley playbook, artificial intelligence companies charged rock-bottom prices to hook customers after ChatGPT burst onto the scene.

Kevin Simback of start-up 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 and manage files. And they are expensive to run because one task can spin up dozens of agents all working at once, each racking up charges.