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<Research> China Merchants Securities: Alphabet Inc. (GOOG.US) and OpenAI Price War Intensifies, AI Demand Diverges in Enterprise Budgets
China Merchants Securities released a report on the US internet sector, noting that Alphabet Inc. (GOOGL.US) has launched a mass-market budget AI offering, while Anthropic’s fronti...
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<Research> China Merchants Securities: Alphabet Inc. (GOOG.US) and OpenAI Price War Intensifies, AI Demand Diverges in Enterprise Budgets
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China Merchants Securities released a report on the US internet sector, noting that Alphabet Inc. (GOOGL.US)      has launched a mass-market budget AI offering, while Anthropic’s frontier models target elite developers. The AI price war between Alphabet and OpenAI is intensifying, with ongoing capital competition centered on computing power and infrastructure. OpenAI is reportedly considering substantial price cuts to its products to compete for Anthropic’s clients. Meanwhile, Alphabet has reduced the subscription price of its AI Plus plan from USD7.99 per month to USD4.99 per month and doubled the built-in storage to 400GB. This package is sufficient to meet the daily needs of a large number of knowledge workers.
Independent AI labs such as OpenAI and Anthropic face structural challenges in matching Alphabet’s offering, as they bear higher incremental costs while also facing pressure on financial performance.

The report stated that Anthropic has widened its lead over peers in frontier coding intelligence through Fable 5. Fable 5 is built on Mythos and incorporates guardrails in cybersecurity. Coding and agent-based coding benchmark tests show a clear intelligence improvement gap compared with peers. Pricing remains at the high end, at USD10 per million input tokens and USD50 per million output tokens, significantly higher than lower-cost alternatives such as DeepSeek V4-Pro. It also features a Covered Model data retention policy tailored for enterprise compliance. This gives Fable 5 a clear advantage in mission-critical and security-sensitive software development scenarios, where reliability and intellectual property protection far outweigh pure cost considerations. Competition in coding between Anthropic and OpenAI remains intense. The broker believes peers are also making continuous progress and expects more specialized frontier capabilities to emerge, further escalating the model race.

The broker noted that AI demand within enterprise budgets is diverging due to differences in pricing and capabilities. Corporate clients are becoming increasingly aware of the high and rising costs of running frontier AI models at scale, with practical bottlenecks in computing, power supply, and cooling becoming more evident. This is driving a clear bifurcation in AI adoption: well-funded large enterprises with high-value application scenarios continue to deploy the most advanced models, while other companies shift to cheaper and simpler alternatives to accomplish tasks. Recent sharp price cuts by Gemini and OpenAI, alongside more aggressive pricing from Chinese models, coinciding with the launch of Anthropic’s Fable 5, further highlight this trend. It also indicates that the LLM layer is gradually becoming commoditized in everyday application scenarios, with competition in inference increasingly dominated by infrastructure players. The broker’s top picks are Alphabet Inc. (GOOG.US)      , Meta Platforms, Inc. (META.US)      , and Amazon.com, Inc. (AMZN.US)      . (ha/u)(Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)

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