Capability price deflation

The price of a fixed level of capability collapses year after year.

Facts

Lane: Capital and talent
Wave: 2 of 12 (build order, not a date)
Needs: 1 boxes all the way back through hard links
Unlocks: 5 boxes downstream through hard links
Leverage: None: already built
Cluster: Around datacentre capex

Evidence as of October 2026

Epoch AI measures prices for a fixed capability falling between 9x and 900x a year, and State of AI 2026 puts the cost of reaching a fixed benchmark score down about 13x a year. Apollo’s Torsten Slok treats the collapse as a risk to whether hyperscaler capex pays back.

Around it

Needs · 2

Algorithmic efficiencycapability · Built today
Hardware cost per tokencapability · Built today · helps, not required

Unlocks · 8

Cognitive abundancestage · Speculative
Capex payback gapbrake · Emerging
Token demand explosionstage · Built today
Always-on background agentsstage · Emerging
Low-price AI for emerging marketsstage · Emerging
Agent economiesstage · Speculative · helps, not required
White-collar hiring slowdownstage · Emerging · helps, not required
Offshore services displacementstage · Emerging · helps, not required

Loops and off-ramps

Cheaper means morereinforcing loop
Commoditisationbalancing loop
Taiwan chip disruptionoff-ramp · slowed