Goldman Sachs data shows AI model costs fell as fast in three years as PC prices did in 15

Goldman Sachs data shows that AI model prices have fallen about as much in three years as personal computer prices fell over 15. That comparison is the core of a recent analysis by venture capital firm a16z. It suggests the AI industry is compressing a generation of tech deflation into a single product cycle. The numbers behind the collapse The a16z analysis tracks large language model pricing against a baseline index set at 100 in March 2023. By September 2026, the index had dropped to approximately 5. That works out to a decline of approximately 95%. A service that cost a dollar at the start now costs about a nickel. The benchmark the analysis uses is the personal-consumption-expenditures (PCE) price index for computers. The analysis says it took roughly 15 years for computer prices to fall by a similar amount. That decline happened during the ICT investment wave that began in the 1980s. The analysis credits three forces for the speed of the AI price drop: intense competition among model developers, growing efficiency in proprietary models, and the arrival of cheaper open-source alternatives. Token prices tell the same story, only louder A separate gauge points in the same direct...