Cheap Chinese and open source LLMs could trigger trillion-dollar AI infrastructure 'reset'

A financial analyst is questioning whether the collapse in AI costs owing to the arrival of Chinese, low-cost and open source models will cause a “reset” in the AI story as cloud providers struggle to recoup trillions of dollars of capital spending. In a recent research note focused on Asian markets, Jefferies estimates that about half of the roughly $2.3 trillion contracted backlog at Microsoft, Alphabet, Amazon and Oracle is owned by OpenAI and Anthropic. Yet Chinese AI models, open source/weight and small language models, threaten to undercut the prices the two US leaders charge, casting doubt on their future revenue. Jefferies points to research from global aggregator platform OpenRouter, which found Chinese models processed 76.12 trillion tokens in the week ended 27 September, up from just 4.37 trillion in late April. The top four US providers processed 14.2 trillion tokens. …