Falling AI Costs Will Reshape Industry, Capital Markets and Energy Demand, Says Terra Invest's Krishan Rattan

Dubai, October 16, 2026 – As artificial intelligence becomes cheaper to deploy, its impact will reach well beyond software. It could create new industrial categories, drive demand for physical infrastructure and change where capital is deployed, according to Krishan Rattan, founding partner of global investment firm Terra Invest.

Rattan argues that the most important consequence of lower AI costs is not greater efficiency in existing tasks. Falling costs could make previously uneconomic research, engineering and production commercially viable. An engineering team that once compared a handful of designs might examine thousands, while scientific organisations could pursue hypotheses that would otherwise have gone unexplored.

The economics are already shifting. Stanford's 2025 AI Index reported that the cost of running a system at roughly GPT 3.5 level capability fell by more than 280 times between November 2022 and October 2024.

Rattan expects lower costs to encourage greater use rather than lower spending. That expansion carries a physical consequence: substantially greater demand for computing infrastructure and electricity. The International Energy Agency's 2025 Energy and AI report projects, in its base case, that global data centre electricity consumption could rise from roughly 415 terawatt hours in 2024 to approximately 945 terawatt hours by 2030.

Rattan's analysis concludes that AI may begin as a computational technology, but its most significant consequences could ultimately be industrial. Regions that combine AI capability, energy, infrastructure and finance could capture a disproportionate share of the next phase of AI led growth.

About Terra Invest

Terra Invest (Terra Vision Investments LLC) is a global investment firm where capital works alongside public policy, academia and governance, investing across AI, financial services, healthcare, green energy and infrastructure in India and the Middle East. The firm has offices in London, Dubai, Abu Dhabi, Miami and Singapore. Full commentaries are available at terra-invest.com/insights.