a16z says falling AI prices are fueling demand faster than costs decline

A report cited by Techub and attributed to The Decoder says the AI market is showing signs of the Jevons paradox. According to a16z, prices for AI tokens have kept falling, while rental prices for NVIDIA H100 GPUs have remained stable or continued to rise. The report argues that cheaper AI is driving usage and demand at a pace that exceeds the rate of cost declines. In other words, lower prices are not easing pressure across the stack. Instead, demand is expanding quickly enough to keep key infrastructure pricing firm, at least in the case of H100 rentals. a16z also warns that if demand starts to flatten, the impact would not be limited to a single segment. The effect could spread across the industry chain, from chip manufacturers to cloud providers. No additional figures were provided in the summary cited by Techub.