LLM price war may lead to 'catfish effect'

Intensifying AI competition to make cutting-edge tech cheaper, more efficient

As large language model prices continue to decline, evolving market dynamics and intensified price competition will determine which players thrive in the coming years, said industry experts.

"Low pricing doesn't mean losses. When it comes to LLM profitability, doing more with less is entirely achievable," said Zhang Tong, a senior director analyst at market consultancy Gartner.

Zhang's remarks follow Chinese AI startup DeepSeek's revelation of its daily costs and theoretical revenue on Saturday, which has sparked intense discussion about the profitability of LLMs.