OpenAI and Anthropic cut model prices

That tension is already showing up in the market. Microsoft, a key OpenAI backer, ended the session at $498.89 on Aug. 14 after a sharp run, with its stock trading well above the 200-day moving average and the RSI in overbought territory at 85.8. Nvidia, the dominant AI chip supplier, closed at $226.51, also with RSI readings above 70, reflecting how deeply investors remain committed to the AI buildout even as the business model comes under pressure.

The broader macro backdrop is not helping. The 10-year Treasury yield was at 4.68% on Aug. 12 and the Fed funds rate was 3.63% in July, underscoring that capital remains expensive relative to the near-zero-rate era that helped ignite the first wave of AI spending. For AI startups and heavily loss-making model developers, that makes pricing power and cash discipline more important.

The pricing battle also highlights the changing competitive map. Chinese AI groups are gaining ground by offering cheaper systems, forcing OpenAI and Anthropic to respond not just with better models, but with lower prices, broader distribution and faster release cycles. Alphabet, which has its own AI ambitions and cloud push, closed at $346.55, while Microsoft and Nvidia remain tied to an AI ecosystem that depends on continued enterprise spending.

For investors, the key question is whether cheaper models expand adoption enough to offset margin compression across the stack, from cloud providers to chipmakers to model developers. If the price cuts spark faster usage, that could keep the AI cycle intact; if they mostly reflect weakening pricing power, the market may start to reassess how much of the sector’s valuation premium is justified.

The next catalyst is likely to come from product announcements, enterprise uptake data and any signal that Chinese competitors are forcing another round of discounts.