Is AI’s Business Model Starting to Crack? Merryn Talks Money

The AI investment cycle currently faces a critical juncture as the market shifts from initial hype to evaluating actual utility and capital expenditure returns. While demand for compute remains high, the proliferation of cheaper, non-frontier models is driving down token prices even as GPU rental costs climb. This divergence creates potential risks for the valuations of major AI labs, which are increasingly viewed as exit opportunities rather than growth vehicles. Meanwhile, the rapid adoption of AI agents threatens to overwhelm existing institutional and business systems, creating friction that necessitates new, AI-native operational models. Despite these uncertainties and the risk of a near-term market correction, AI remains a fundamentally transformative technology that will reshape society, provided that product-market fit catches up with the massive infrastructure investments currently underway.