Altman’s Law

For decades, Moore’s Law served as the foundation of technological forecasting, predicting that computing power would double roughly every two years due to improvements in transistor density.

This principle shaped hardware development and economic planning in the digital age.

Today, a new law is emerging — one that describes the unprecedented pace of artificial intelligence (AI) advancement.

OpenAI’s CEO Sam Altman recently made the following three observations in a blog post:

• The intelligence of an AI model roughly equals the log of the resources used to train and run it. These resources are chiefly training compute, data, and inference compute. It appears that you can spend arbitrary amounts of money and get continuous and predictable gains; the scaling laws that predict this are accurate over many orders of magnitude.
• The cost to use a given level of AI falls about 10x every 12 months, and lower prices lead to much more use. You can see this in the token cost from GPT-4 in early 2023 to GPT-4o in mid-2024, where the price per token dropped about 150x in that time period. Moore’s law changed the world at 2x every 18 months; this is unbelievably stronger.
• The socioeconomic value of linearly increasing intelligence is super-exponential in nature. A consequence of this is that we see no reason for exponentially increasing investment to stop in the near future. Altman’s Law is a term coined in this essay to describe the AI acceleration trends outlined by Sam Altman in his blog post, “Three Observations.”While Altman identifies these patterns individually, this essay unifies them into a single framework — modeled after Moore’s Law — to describe the accelerating trajectory of AI intelligence, cost decline, and investment growth.

Based on his observations, we define Altman’s Law as follows:

AI intelligence increases logarithmically with resource investment, while the cost of using that intelligence declines by an order of magnitude every 12 months. The socioeconomic value of increasing intelligence is super-exponential, ensuring sustained and growing investment in AI development.Unlike Moore’s Law, which described a steady, hardware-driven march forward, Altman’s Law characterizes AI progress as a runaway feedback loop, where intelligence gains and cost declines feed directly into further investment. This cycle accelerates AI development at a rate beyond traditional exponential growth.

If this trajectory holds, AI will not only transform industries but redefine the very nature of intelligence itself.

The Three Pillars of Altman’s Law

Altman’s observations suggest that AI’s rapid advancement is propelled by three fundamental forces:

1. Intelligence Scales Logarithmically with ResourcesAltman notes that AI intelligence grows in direct proportion to the logarithm of the resources invested in training and inference. These resources — compute power, data, and model size — scale predictably across multiple orders of magnitude.

Unlike traditional computing, where software improvements often hit efficiency plateaus, AI exhibits continuous, predictable returns on increased investment. In other words, the more we put in, the smarter AI gets, with no apparent upper limit in sight.

2. The Cost of AI Declines by a Factor of 10 Every YearWhile Moore’s Law predicted a 2x improvement in computing power every 18 months, AI cost declines follow a far more aggressive trajectory. As Altman highlights, the token cost of AI services like GPT-4 dropped by 150x between early 2023 and mid-2024 when transitioning to GPT-4o.

This unbelievably fast cost collapse is already reshaping industries, making high-level AI capabilities accessible at a fraction of their previous price.

The implications of this rapid price reduction are profound:

as AI becomes cheaper, its adoption surges, creating a self-reinforcing cycle where greater usage fuels even more investment, which in turn leads to further cost reductions.Unlike previous computing trends, where price-performance improvements followed a predictable trajectory, AI’s cost curve is steeper, faster, and fundamentally disruptive.

3. AI’s Economic Impact is Super-ExponentialPerhaps the most striking observation from Altman is that the socioeconomic value of increasing AI intelligence grows at a super-exponential rate.

In traditional industries, increasing intelligence or efficiency leads to incremental gains. AI breaks this mold by enabling compounding breakthroughs:

each small improvement in intelligence unlocks entirely new forms of value creation, accelerating the pace of change.Since the socioeconomic value of increasing AI intelligence grows at a super-exponential rate, there is no foreseeable reason for exponentially increasing investment to stop.

AI’s return on investment is accelerating, creating a feedback loop of growing intelligence, lower costs, and even greater economic disruption. This is not just a faster form of technological progress — it is an entirely new paradigm of intelligence acceleration.

From Exponential to Super-Exponential GrowthMoore’s Law suggested predictable technological growth. Altman’s Law suggests runaway technological growth.

To grasp the difference, consider exponential growth, where a quantity doubles over fixed intervals (e.g., Moore’s Law, where computing power doubled every 18 months). Super-exponential growth, however, means that the doubling time itself shrinks — each cycle happens faster than the last.

Imagine a rocket: Moore’s Law is like constant acceleration, while Altman’s Law is like a booster engine that continuously increases its thrust. With every iteration, AI doesn’t just get smarter — it gets smarter faster than before, unlocking new capabilities and reshaping industries at an accelerating pace.

The Economic Consequences of Altman’s Law

If Altman’s Law holds, the economic landscape will be transformed in ways we are only beginning to understand.

The Collapse of Knowledge WorkIndustries built on human expertise — law, medicine, finance, and software engineering — will be radically disrupted. AI-driven automation will make high-wage knowledge work nearly free, forcing a fundamental rethink of the economy.

The Shift in Economic ScarcityWhile AI makes intelligence abundant, not all forms of value will become free. Scarcity will shift from human expertise to real-world assets — land, energy, proprietary datasets, and computational infrastructure.

Consider the Industrial Revolution:Just as mechanized farming reduced the value of manual labor while making land and machinery more valuable, AI will erode the value of cognitive labor while making compute power, energy, and proprietary data even more essential.

In this new era, opportunity will be defined not by what you know, but by what you own.

The Rise of AI-Centric Business ModelsThe balance of power will shift toward companies and individuals who own and control the infrastructure behind AI — from specialized computing chips to vast proprietary datasets. Businesses that fail to adapt to this AI-first economy risk being left behind.

Preparing for the Age of Altman’s Law

Altman’s Law is not just an observation — it’s a warning shot for the future. Governments, businesses, and individuals must adapt now, or risk being blindsided by AI’s acceleration.

• Policymakers must rethink taxation, regulation, and economic safety nets in a world where knowledge work loses value but physical constraints (such as land and energy) remain.
• Businesses must redefine value creation, shifting away from labor-intensive models to AI-driven efficiencies. The future belongs to those who own compute power, proprietary data, and real-world assets.
• Individuals must prepare for an AI-driven economy, focusing on adaptability, creative problem-solving, and strategic ownership of scarce resources. Just as Moore’s Law shaped the last half-century of technological progress,

Altman’s Law will define the next.This shift is not just about making technology faster or cheaper — it’s about the fundamental restructuring of intelligence itself.

If Altman’s predictions hold, the AI revolution isn’t coming gradually — it’s already here, accelerating at breakneck speed.

The challenge now is not merely keeping up, but understanding how to thrive in a world where intelligence is no longer a constraint — but an abundant, ever-expanding force.

Three Observations Our mission is to ensure that AGI (Artificial General Intelligence) benefits all of humanity. Systems that start to…blog.samaltman.comAuthor’s Note

Thank you for reading this exploration of Altman’s Law and its implications for AI, economics, and the future of intelligence. As AI advances at an unprecedented pace, understanding its impact on labor markets, wealth distribution, and societal structures is more important than ever.

If you enjoyed this essay, I invite you to explore my other writings on AI, economics, and modern American society, where I examine topics like:

• DeepSeek: Lean AI Disrupts America’s Compute-Heavy Tech Giants — How a chinese firm was able to disrupt the American AI market.
• Generation Inflation — Why young Americans feel they need astronomical salaries to survive, and how market concentration, inflation, and cultural shifts contribute to this mindset.
• A Really Boring Topic — A deep dive into the tunnel boring industry, its economic potential, and whether infrastructure innovation can keep up with urban expansion.
• Why Obergefell will not be Overturned— A discussion on the differences between Obergefell and Roe explaining that Obergefell was based on marriage as a fundamental right. I’m always looking to start conversations about the intersection of technology, policy, and economic change, so feel free to connect, discuss, and share your thoughts.

You can find more of my work here https://medium.com/@lawtonperret .

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