Cheap AI could derail OpenAI and Anthropic's IPOs

OpenAI and Anthropic's expected IPO valuations (both projected over $800 billion) depend on maintaining high pricing power, but cheaper AI alternatives are rapidly emerging and becoming competitive. Chinese AI labs like DeepSeek and Kimi charge a fraction of what OpenAI and Anthropic do for comparable work, and enterprises are adopting cost-reduction strategies like "advisor models" (where a cheap open-source model handles most tasks and only calls expensive frontier models when needed), causing usage of Chinese models on some platforms to jump from 1% to 60% in just one year.