Source: Paul Kedrosky
The economics of large language models are inverting as open-source alternatives capture market share from proprietary vendors, forcing companies like OpenAI and Anthropic to compete on capability rather than scarcity. This shift channels capital toward infrastructure—GPUs, data centers—rather than model licensing, which explains why private equity is now the dominant buyer of AI compute assets. They're betting on commoditization, not perpetual software rents. The winners aren't model makers but the companies controlling the computational bottleneck.