How much intelligence do you need?
Anthropic's new model Fable 5 is stunning. It is a step change in "creatability". I made the music and video below this morning with a few prompts, and have already seen it create slick and skillful apps with minimal guidance
The big question remains around cost. Fable is 2x more expensive than Opus 4.8, and the latter was already running into serious issues as companies struggle with exploding token costs while ROI has not arrived at scale - yet
This dynamic collides with substantial roadblocks on the data center rollout side, with c. 60% of the capacity planned for '27 currently looking unlikely due to permit or labor shortages, creating a headwind for the naturally to be expected token cost decline
The result is likely a bifurcation of the Enterprise AI market between applications in need of high intelligence that pay up (drug discovery, creative industries or complex design) and rapid adoption of
90% cheaper open source models for mundane tasks (e.g expense sorting or fraud detection)
The trillion dollar question for the US economy will be what volume falls onto either side. If high intelligence is in enough demand, then the economic boom continues as the DC buildout that carries GDP can be funded, incl. into space. If most applications are content with open source then everything changes
It will be a few quarters until we know the answer, with the key metrics to follow the Anthropic and OpenAI monthly ARRs & a common sense read of what enterprises continue to tell us on the success of their AI initiatives