India's genuine competitive strength is in the application layer of artificial intelligence rather than in possessing underlying large language models (LLMs), according to Mahindra Group Chairman Anand Mahindra. The veteran industrialist expressed his opinions on social media in response to a widely reported CNBC interview in which Palantir CEO Alex Karp denounced the existing frontier AI price structure.
Anand Mahindra thinks the industry's greatest long-term advantage might be found elsewhere as nations and businesses invest billions in creating ever-more-powerful AI models.
Palantir CEO Alex Karp has criticised AI behemoths like OpenAI and Anthropic for their token-based pricing, claiming that companies are squandering money with unclear returns. According to Karp, businesses are now concentrating on whether their AI expenditures yield a definite return on investment rather than just purchasing additional tokens.
Mahindra stated in a post on X that Karp's interview will "be widely discussed and debated," admitting that the Palantir CEO's remarks would be seen as self-serving by some. He did, however, assert that the underlying architecture merits further examination.
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Mahindra posted, "Some will call Alex's comments self-serving but there is an underlying argument he makes which I think is worth taking seriously: AI has three layers. Compute. Model. Application."
Mahindra agreed with Karp's argument that critical infrastructure cannot rely on AI models alone.
"He argues that critical infrastructure doesn't run on a model alone, that it needs an application layer sitting on top. I think he's right about the stack. I made a version of this argument in my recent letter to TechM's shareholders this year: AI is like today's smartphone: remarkable technology, but indispensable only because of the apps and experiences built on top of it. The ecosystem determines who creates lasting value, not the chip or the model underneath," he further stated.
Alex Karp's CNBC interview is going to be widely discussed and debated.
— anand mahindra (@anandmahindra) July 2, 2026
My initial take on it:
Some will call Alex's comments self-serving but there is an underlying argument he makes which I think is worth taking seriously: AI has three layers. Compute. Model. Application.… pic.twitter.com/vTLTW1RtBE
Mahindra highlighted Karp's argument that enterprise AI required safeguards beyond what a foundation model can give.
"For AI services, from his arguments, it appears the more durable commercial and strategic edge is the application layer: model-agnostic, built on whichever open model fits best, carrying decades of enterprise workflow knowledge that no model provider owns. As Karp says, the application layer “takes a large language model & makes it safe and precise…Everyone gets to ask the basic questions: who owns the data, where is it cashed, are the prompts secure, is this being transferred to you?” And “critical infrastructure does not run these models without an application layer (sic),” Mahindra wrote.
To attain full technological sovereignty in an AI ecosystem, a balanced, three-pronged strategy is needed. Mahindra's viewpoint emphasises that if the surrounding infrastructure and useful use cases are disregarded, concentrating only on developing foundational models will result in a bottleneck.
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Mahindra thinks that because AI service companies already have decades of experience with enterprise workflow, they may have a long-term competitive advantage.
Rather than controlling the underlying model, these organisations may stay model-agnostic — picking whichever open or proprietary model best matches a customer's needs — while designing secure, industry-specific apps that protect business knowledge, governance and operational control.
"The application also has to enable business enterprises to preserve their ‘alpha.' That's where I truly believe AI service companies have the edge. Not necessarily in owning the model, but in owning what sits above it. I'm keen to hear other reactions to his interview," Mahindra posted.
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