What it means
A token is the unit of text an AI model reads or writes — roughly a word or a fragment of one. Models process language by breaking it into tokens, and almost all AI pricing is quoted per million tokens, in and out. Tokens are the meter of the AI economy: every query a model answers consumes input tokens and produces output tokens, and the total volume of tokens served is a direct measure of how much AI is actually being used. Because cost and revenue are both denominated in tokens, the unit ties model behaviour straight to economics.
Why it matters to investors
Tokens are the closest thing AI has to a usage meter, which makes total tokens served a cleaner demand signal than headlines about model releases. Watching token volumes and the price per token reveals whether real usage — and therefore durable compute demand — is rising, regardless of the hype cycle.
Companies on this part of the chain
Named to show where the term sits in the AI supply chain — research, not advice, and never a recommendation to buy or sell.
Related terms
See Token in the live AI chain.
THE ENTITY maps every constraint onto one live model — which part is tight now, who owns it, and who gets squeezed when it moves. Plain-English reads you can check.
THE ENTITY is an educational read on the AI supply chain — research, not investment advice. It explains how the chain works and who sits where, never price targets or buy/sell calls.