AI Spending Stalls: What It Means for Your Business

The Spending Slowdown

A new report from Ramp, a corporate card and expense platform, indicates that AI spending has flatlined over the late summer months. According to the data, token spend only grew 1.5% across August and September. This is a sharp deceleration compared to July, when spending grew 42% from the previous month. The data suggests that while companies are using more AI, they are not spending more on it.

Ramp’s lead economist, Ara Kharazian, noted that almost the entire spend on AI is from venture-backed, high-growth tech companies. He warned that if this spend starts to slow down due to market factors, it could lead to cascading effects across the industry. The data shows that the top 1% of firms, which are the most heavily invested in AI, have seen a slight stutter in their spending. These firms were hitting peaks of $10,000 per employee in the summer, but their spend has come up just below that mark in recent months.

Why Prices Are Dropping

The slowdown in spending is not due to a lack of demand. In fact, AI volumes are rising. Instead, the primary driver is the competitive nature of the marketplace. OpenAI and Anthropic have both made significant price cuts. In September, OpenAI cut API prices in half for GPT-6 Sol and GPT-6 Luna. Anthropic has also reduced pricing for Fable 5.1 and Opus 5.5, a decision that the company said in a recent filing slashed revenue growth by about $600 million.

These price cuts have created a buyer’s market. Kharazian pointed out that other companies, including Meta and Nvidia, are introducing enterprise offerings with cheaper or open-source models. Additionally, new tools like Jev, a lightweight tool for choosing between predetermined outputs, are becoming popular for simple tasks. This competition means that businesses can complete workloads at a much lower cost than before. The era of hypergrowth may be over, replaced by a focus on efficiency and cost management.

Smarter Cost Controls

Beyond price cuts, businesses are becoming better at controlling their AI costs. Kharazian observed that as companies get more advanced in using AI, they become better at figuring out how to control it. They are more likely to use defaults that prevent the usage of very expensive models for long-running tasks. They are also more likely to impose budgets on employees and offload spend from standard models to cheaper ones via routers.

Notion co-founder Akshay Kothari recently shared internal data that matched Ramp’s insights, noting that while tokens are increasing, costs are decreasing. This trend is significant for small businesses because it means that the cost of entry for effective AI usage is dropping. You do not need to spend $10,000 per employee to get value. Median firms spend $12 to $15 per employee per month, and the top 10% spend $600 to $1,000. For most small businesses, the goal is not to match the top 1% but to find the right balance of cost and utility.

Implications for Small Businesses

For small business owners, this market shift is a positive development. The hype premium is disappearing. You no longer need to pay top dollar for AI tools that may not be the most efficient for your specific needs. The market is now focused on providing value at lower price points. This is a good time to invest in AI tools without the pressure of keeping up with the most aggressive spenders in the tech sector.

However, it is important to be realistic about your needs. Kharazian noted that it is not necessarily true that a doctor’s office or a car dealership will need to spend as much on AI as a software company. The use cases for small businesses are often simpler, such as basic decision-making or routine tasks. By leveraging cheaper models and tighter cost controls, you can achieve significant productivity gains without inflating your budget. The key is to focus on specific use cases where AI provides clear value, rather than adopting tools for the sake of adoption.

Takeaways

• AI spending growth slowed to 1.5% in late summer, down from 42% in July, indicating a market correction.
• Price cuts from major providers like OpenAI and Anthropic have made AI tools more affordable for small businesses.
• Businesses are adopting stricter cost controls, such as using cheaper models for routine tasks, to maximize ROI.