The AI Collapse Nobody Is Ready For

AI token prices are collapsing, but compute demand and application value remain robust amid deflationary pressures. Volume growth in AI usage has outpaced price declines, but monetization per compute unit is under pressure. Value is shifting downstream from model vendors to software applications as AI becomes commoditized. Physical bottlenecks and software leaders are favored; undifferentiated model vendors face structural headwinds.

The blended price of a million tokens hit a record low of $0.97, raising some harsh questions for AI. But it’s important to break down what exactly is happening. Three different deflations