Palo Alto Networks CEO says AI token prices must fall 90%

The chief executive of a major cybersecurity firm has issued a stark warning that the cost of deploying artificial intelligence must fall dramatically before it can be widely adopted by large enterprises. Nikesh Arora, CEO of Palo Alto Networks, said on Thursday, July 9, that AI token prices need to drop by as much as 90 percent to become viable for true enterprise-scale use.

Arora outlined a specific timeline for the necessary cost reductions, stating that prices should shrink to roughly 20 percent of current levels within the next 12 months, and then to just 10 percent the following year. His remarks came in response to OpenAI CEO Sam Altman's announcement that the company's newest model delivers 54 percent better token efficiency on agentic coding tasks. While Arora called that improvement a good start, he emphasized it was insufficient, suggesting the industry needs another significant turn of efficiency gains.

This call for lower costs reflects a broader paradox in the enterprise AI market. While headline per-token prices have plummeted by an estimated 98 percent since late 2022, total enterprise AI spending has tripled over the same period. Analysts attribute this...