Why cheaper AI models could bankrupt the frontier labs
enterprise ai is pivoting to smaller, cheaper models, potentially cutting 80% of workloads from openai and anthropic.
the ai industry faces a potential economic reset as enterprises abandon the assumption that bigger models are strictly better. brian armstrong predicts 80% of workloads will shift to 99% cheaper models within 12-18 months, retaining frontier models only for high-iq tasks. legal ai startup harvey validated this by cutting costs 3x using fireworks ai's glm 5.1 alongside claude opus. if broadly adopted, this optimization could severely reduce inference revenue for big labs, challenging the financial viability of training massive frontier models.