Palo Alto Networks CEO Nikesh Arora says AI token costs need to drop as much as 90%

According to CNBC, Palo Alto Networks CEO Nikesh Arora said token costs for artificial intelligence need to fall sharply to enable large-scale adoption, arguing that pricing must drop to as much as 20% over the next twelve months and by 90% the following year. He said OpenAI’s latest model being 54% more token-efficient for agentic coding is a start but not enough, and warned that rising token costs are straining corporate AI budgets and making tools harder to deploy. Arora said some businesses are turning to cheaper open-weight tools, including Chinese models, while AI spending continues to climb as companies fund infrastructure buildouts, citing SpaceX raising $25 billion last month in a bond sale and Amazon raising $25 billion in debt this week.