{"id":662735,"date":"2026-10-23T03:12:17","date_gmt":"2026-10-23T03:12:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/662735\/"},"modified":"2026-10-23T03:12:17","modified_gmt":"2026-10-23T03:12:17","slug":"big-companies-are-rethinking-out-of-control-ai-spending-and-turning-to-cheaper-models","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/662735\/","title":{"rendered":"Big companies are rethinking ‘out of control’ AI spending \u2014 and turning to cheaper models"},"content":{"rendered":"\n

IBM (IBM<\/a>) is calling attention to a growing trend among companies and their AI spending: They’re keeping a closer eye on it. <\/p>\n

“I think what we are seeing is that at least larger enterprises are becoming a lot more cognizant and a lot more aware of what the true ROI of all of their AI spend is,” IBM CEO Arvind Krishna said during the tech company’s earnings call<\/a> on Wednesday. <\/p>\n

“They are also getting worried if some of the AI spending is completely out of control with no real return,” he added. <\/p>\n

252.11 +0.65 (+0.26%) <\/p>\n

At close: October 22 at 4:00:02 PM EDT <\/p>\n

250.13 -1.98 (-0.79%) <\/p>\n

Overnight: 11:10:21 PM EDT <\/p>\n

While hyperscalers have been ramping up capital spending on AI infrastructure and data centers, enterprise customers are increasingly turning to open-weight models<\/a>, whose core components are public, as a more cost-effective way to implement AI. <\/p>\n

“Our computation is that for an average large enterprise, you can get going with maybe two or three racks [of infrastructure],” said Krishna. “It gives you the ability to run those open-weight models currently, anywhere from 25% to 10% of the token cost of the frontier models.” <\/p>\n

\"Arvind<\/a> Arvind Krishna, CEO of IBM, speaks during a meeting of the Economic Club of New York in New York City, U.S., October 21, 2024. REUTERS\/Brendan McDermid \u00b7 REUTERS \/ REUTERS <\/p>\n

Krishna noted that IBM’s on-premises IT infrastructure is well-positioned for the shift, enabling the protection of intellectual property by running models locally or on private clouds. <\/p>\n

Apollo chief economist Torsten Sl\u00f8k recently argued that the key metric<\/a> defining the AI build-out isn’t physical capacity or power, but the price customers are willing to pay for the computing power being built. The costs of AI tokens have also fallen sharply.<\/a> <\/p>\n

(Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.) <\/p>\n

Companies are willing to pay a premium for computing power if it helps them increase revenue, improve profit margins, or cut costs. But those benefits have yet to materialize at a meaningful scale, Sl\u00f8k has argued. <\/p>\n

Frontier AI developers OpenAI (OPAI.PVT<\/a>) and Anthropic (ANTH.PVT<\/a>) are responding to enterprise demand for more affordable models. <\/p>\n

OpenAI introduced lower-cost mid-range additions<\/a> to its GPT-6 model family in September. Earlier this month, Anthropic unveiled Claude Haiku 5.5<\/a>, promising better performance at a lower cost than its predecessor. <\/p>\n

Anthropic is on the march toward its highly anticipated initial public offering IPO with an S-1 filing potentially<\/a> dropping as soon as Friday. <\/p>\n

Ines Ferre is a senior business reporter for Yahoo Finance. <\/p>\n

Click here for in-depth analysis of the latest stock market news and events moving stock prices<\/a> <\/p>\n

Read the latest financial and business news from Yahoo Finance<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"IBM (IBM) is calling attention to a growing trend among companies and their AI spending: They’re keeping a…\n","protected":false},"author":2,"featured_media":662736,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[4818,220,218,219,72,122,113,176,1941,61,1831,31173,1942,60,1407,12455,12883,174,13047,9115,1611,4755,1943,1944,131,31174,5066,80,31175],"class_list":["post-662735","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-401k","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-business","tag-business-news","tag-economy","tag-finance","tag-financial-information","tag-ie","tag-investing","tag-investment-tools","tag-investor","tag-ireland","tag-market-news","tag-mortgage","tag-mutual-funds","tag-personal-finance","tag-quote","tag-real-estate","tag-retirement","tag-stock","tag-stock-research","tag-stock-valuation","tag-stocks","tag-suze-orman","tag-tax","tag-technology","tag-track-portfolio"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/662735","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=662735"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/662735\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/662736"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=662735"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=662735"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=662735"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}