IBM CEO Says Open AI Models Are 90% as Good as Frontier Models: ‘Why Pay 10x More?’

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International Business Machines Corp. Chairman and CEO Arvind Krishna questioned enterprise spending on frontier artificial intelligence models, stating that open-weight alternatives now offer nearly equal performance at a fraction of the price.

CEO Asks ‘Why Pay 10x More?’

Speaking during the company’s third-quarter 2026 earnings call, Krishna outlined the shrinking performance gap between the industry’s most advanced frontier large language models and alternative open models. Krishna stated that open-weight models now run at 10% to 25% of the token cost of frontier models.

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“Our computation is that for an average large enterprise, you can get going with maybe two or three racks, which is not a huge amount of infrastructure, but it gives you the ability to run those open-weight models. Currently, anywhere…