In the early days of the internet, sending data across the web was painfully expensive.

Back in 1998, it cost roughly $1,200 per megabit per month to push information down a fiber-optic cable. It’s hard to imagine now, but a single YouTube video would’ve burned through thousands of dollars in bandwidth.

Today, that cost is so low it’s barely measurable.

Data has become “too cheap to meter.”

And that single shift has unlocked everything we’ve come to enjoy alongside the modern internet: Google (GOOGL), Netflix (NFLX), Spotify (SPOT), YouTube, and more.

Now, we’re watching the same thing happen with artificial intelligence (AI).

• But this time, it’s not data that’s becoming free… it’s intelligence.

AI costs are crashing at an even faster pace than internet bandwidth did.

A task that cost $60 per million tokens just three years ago now costs around six cents. That’s a 1,000X collapse in price—and it’s happening across the board, from OpenAI to Anthropic to open-source large language models.

Think of tokens as the “units of thought” an AI uses to read, write, reason, or answer a question.

The cheaper those tokens get, the cheaper it becomes for an AI to do real work: summarize documents, write code, analyze data, even act as a virtual assistant.

In other words, the cost of intelligence is falling the same way the cost of moving data once did. This means we’re moving from a world where only big tech could afford to run powerful AI models…

…to one where any startup—or even an individual developer—can build an AI app with superhuman capabilities for next to nothing.

• Cheap intelligence = new businesses.

Every time technology costs fall by an order of magnitude, new businesses emerge.

When computing got cheap, we got personal computers. When data storage collapsed in price, we got cloud software. When mobile bandwidth dropped, we got Uber (UBER), Instagram, and TikTok.

Now AI inference—the cost of actually using AI—is collapsing, and it’s already unlocking businesses that weren’t possible just a few years ago:

• Character.AI, a conversational AI platform, now handles over 20,000 queries per second—and it’s cut costs by 33X since 2022.
• Cursor, an AI-powered coding assistant, hit $100 million in recurring revenue in three years.
• Across the top 100 AI apps using Stripe, the average annual revenue is already $5 million, despite the category barely existing two years ago.

The speed and scale of what we’re seeing tells me we’re just getting started.

• This isn’t just an AI usage boom. It’s a platform shift.

Some folks still think of AI as just another tool to speed up your workflow. Something that’s “nice to have,” but not necessary.

They’re missing the bigger picture.

AI isn’t just a layer you add to an existing business. For the next wave of disruptors, AI is the business.

To understand what’s coming, it helps to look back.

Between 2005 and 2017, independent pizzerias in America were getting crushed by big franchises. Then a startup called Slice gave local shops access to powerful software—online ordering, payment, marketing, even branded pizza boxes.

With just a few clicks, a mom-and-pop shop could compete with Domino’s.

Slice didn’t use AI. But it shows what happens when powerful technology becomes easy and cheap to deploy: the playing field tilts.

Now imagine that kind of software leverage… but supercharged with intelligence.

Instead of clicking a button to get a website, you’ll click a button and get a PhD-level researcher, a 24/7 customer service rep, or an AI-powered coder who works tirelessly, and nearly for free.

That’s what happens when intelligence becomes too cheap to meter. It unlocks new businesses everywhere—and shifts the balance of power across entire industries.

• We’ve hit the inflection point.

AI is no longer just a research project or a toy.

It’s quickly becoming a core part of how businesses operate—one that’s cheap, scalable, and increasingly everywhere.

If we use history as a guide, that’s when the biggest opportunities start to emerge.

We’ve seen this play out before. When broadband prices collapsed, it unlocked streaming, social media, and apps that rewrote how we live and work.

AI is following the same script, only faster.

I’ll be tracking this shift closely in my free letter, The Jolt. If you’d like to follow along, you can sign up here.

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Stephen McBride is Chief Analyst, RiskHedge. To get more ideas like this sent straight to your inbox every Monday and Friday, make sure to sign up for The Jolt, a free investment letter focused on profiting from disruption.