OpenAI CEO Sam Altman: AI Costs Could Drop Tenfold Annually, Leading to Cheaper Goods but More Expensive Luxury Items

The cost of running artificial intelligence (AI) is falling at an astonishing rate, according to OpenAI CEO Sam Altman. In a recent blog post published on February 9, Altman revealed that the cost of using AI decreases by approximately ten-fold every year, which could significantly lower the price of goods while simultaneously raising the cost of luxury items.

AI Costs Drop Rapidly, Outpacing Moore's Law

Altman highlighted that the cost of AI has dropped by approximately 150 times between the launch of OpenAI's GPT-4 model in early 2023 and the anticipated release of GPT-4o in mid-2024. This rate of decline is much faster than Moore’s Law, which has historically predicted that the number of transistors on an integrated circuit would double every two years, leading to greater processing power, efficiency, and reduced costs for electronic devices.

“In some ways, AI may turn out to be like the transistor economically—a big scientific discovery that scales well and that seeps into almost every corner of the economy,” Altman explained. His comparison of AI to the transistor suggests that AI could be a foundational breakthrough that revolutionizes industries in a similar way.

Cheaper Goods and More Expensive Luxury Items

As AI becomes increasingly affordable, Altman predicts that the price of many everyday goods will drop significantly. This could make products more accessible to consumers, as businesses benefit from lower production and operational costs. However, Altman also warned that the costs of luxury items, as well as limited resources like land, may rise as a result of these technological advancements. The combination of lower production costs for goods and increased demand for scarce resources could shift the dynamics of both the consumer and luxury markets.

“Right now, the cost of intelligence and the cost of energy constrain a lot of things,” Altman said, pointing to the primary factors that limit economic growth and technological progress. As AI costs continue to plummet, these constraints may ease, unlocking new possibilities for businesses and consumers alike.

Expanding Global Access to AI

Altman also shared his thoughts on how to democratize AI, ensuring that its benefits reach people worldwide. He proposed the concept of providing “compute budgets” to individuals, giving them access to a set amount of computing power to enable broader use of AI tools. While this idea may sound unconventional, Altman believes that offering such resources could allow people globally to tap into the vast potential of AI.

“We are open to strange-sounding ideas like giving some ‘compute budget’ to enable everyone on Earth to use a lot of AI,” Altman said. “But we can also see a lot of ways where just relentlessly driving the cost of intelligence as low as possible has the desired effect.”

Altman’s ultimate vision is for AI to be accessible to all by 2035, when any individual would have access to intellectual capabilities equivalent to that of everyone in 2025. This idea of providing "unlimited genius" could fundamentally transform industries, education, and daily life.

“Everyone should have access to unlimited genius to direct however they can imagine,” he concluded.

The Impact of Low-Cost AI: A Global Shift

The rapid decline in AI costs has already had far-reaching implications. In January, the introduction of a low-cost AI model by Chinese developer DeepSeek sent shockwaves through the global market. US companies, particularly Nvidia—which produces high-cost hardware for AI—saw significant losses, as the cheaper DeepSeek model posed a competitive threat. Chinese automakers and technology companies, as well as leading telecom firms, are already integrating DeepSeek's AI model into their products, according to a report from Reuters on February 9.

As global industries race to harness the power of affordable AI, the economic landscape is poised for substantial shifts. With AI playing an increasingly critical role in everything from manufacturing to finance and healthcare, its continued reduction in cost could usher in a new era of technological innovation, making AI-driven capabilities accessible to individuals and businesses around the world.

Conclusion: A Transformative Future for AI

Altman’s vision for the future of AI is both ambitious and transformative. By driving the cost of AI down and ensuring its widespread availability, OpenAI hopes to democratize access to intelligence in a way that could reshape economies, industries, and society at large. While the cost of many products may decrease as a result, the rise of luxury items and scarce resources could change the landscape of consumer markets.

As the cost of AI continues to fall and its applications grow, the world could see a new era of technological accessibility—one, where individuals can leverage the power of AI to solve complex problems and push the boundaries of innovation.