AI token prices collapse as chip costs climb, squeezing investors

The price of artificial intelligence is deflating in real time while the cost of building it refuses to follow, creating a squeeze that has dominated equity markets this summer. Investors are now grappling with a central question: as intelligence becomes cheaper to buy but more expensive to produce, who absorbs the difference?

The Squeeze Takes Shape

A Bloomberg analysis published Thursday laid out the arithmetic in stark terms. Over the past 10 days alone, a free model called Ox Alpha appeared online performing near the frontier of AI capability with no public attribution, while OpenAI cut prices on its flagship model for the third time in roughly a month. Token prices — the per-unit cost of using AI — have fallen approximately 95% since early 2024.finance.yahoo+2

Yet on the supply side, the semiconductor market is entering what analysts describe as structural undersupply. Samsung Electronics has raised prices for advanced contract chipmaking by up to 15% for new orders and is locking as much as 70% of its memory capacity into multiyear data-center contracts. SK Hynix ↗ 1.92% has warned the memory crunch will worsen in 2027. Some of Nvidia's ↗ 0.90% biggest customers have been told server prices are rising more than 15%.finance.yahoo

Nvidia Delivers, But Margins Flash a Warning

Nvidia reported fiscal Q2 2027 results on Tuesday, posting revenue of $96.2 billion — up 106% year over year — and earnings of $2.22 per share, both exceeding analyst expectations. The company guided for approximately 70% revenue growth in fiscal 2028. Yet the earnings call carried a caveat: Nvidia warned of potential margin narrowing as memory costs rise.marketbeat+2

Credit Markets Price the Doubt

The strain is showing beyond equities. Broadcom ↗ 4.00% is in talks to raise more than $60 billion in debt — potentially including a $30 billion junior tranche — to fund AI chip financing for customers including Anthropic, according to Bloomberg News. Insuring Broadcom's debt now costs about 80 basis points more than in January, and the premium is accelerating.bloomberg+2

Three hyperscalers recorded combined cloud revenue of roughly $106 billion last quarter, up more than 40% year over year, and the share of U.S. businesses paying for AI is approaching 60%. Yet a study by AI advisory firm Maximand found that across 919 earnings calls of the 60 largest U.S.-listed financial firms over three years, only one company cited a realized dollar return from AI — twice, for about $19 million combined.finance.yahoo

"Three years into the AI buildout, the firms buying the technology still cannot put a dollar figure on the payoff," said Milos Maricic, Maximand's founder. The market's response, as Goldman Sachs ↗ 2.07% one-delta trading head Rich Privorotsky put it, is "simply pricing a wider range of outcomes".finance.yahoo