Palantir CEO Alex Karp Criticizes AI Token Model Amid Soaring Costs

Palantir CEO Alex Karp on Wednesday criticized the token model used by U.S. artificial intelligence labs Anthropic and OpenAI as costs skyrocket.

"I'm not throwing shade at them, but something has gone completely wrong," he told CNBC's "Squawk Box." "The basic view among enterprises in this country is I'm going to chillax and waste my time with tokens."

As AI costs surge, and new models prove pricier than previous iterations, enterprises are shifting from a mindset of so-called "tokenmaxxing" in favor of a return on investment.

That setup is prompting some enterprises to adopt open weight models, capable of performing similar tasks at a fraction of the price. Chinese models are also accelerating capabilities, raising concerns that the AI rival could soon catch up to U.S. frontier labs.

Shares of the AI software company climbed 9% on Wednesday.

Karp told CNBC that the industry should not underestimate the speed at which China is making progress in building AI models.

In this environment, many businesses are also shifting from using far-reaching AI models to building and training their own, more efficient proprietary tools.

Earlier this week, Palantir announced an expanded partnership with Nvidia to use the chipmaking giant's AI tools to build custom models for U.S. government agencies.

Karp views open weight models as a potential solution for CEOs frustrated by AI labs.

"What aligns me with Nvidia, and I think is what the technical customers want, which is control over their compute, their models, their data stack and their alpha," Karp said. "They want to know they own the means of production. It's not being transferred to someone else."

— CNBC's Seema Mody contributed to this story.