Goldman Sachs announced the emergence of two competing AI ecosystems in the U.S. and China

The global artificial intelligence market is divided into two competing ecosystems—the American and the Chinese—and this same division is evident in AI investments, according to Goldman Sachs. The technological gap between China and the West is narrowing: Chinese companies are building their AI ecosystems with advanced chips capable of competing with American ones, the bank asserts. Among Chinese companies, it suggests that investors also distinguish between two groups, which are showing different market performance.

“The idea of a global duopoly in the AI market is gaining traction among investors,” wrote Goldman Sachs strategists led by Kinger Lau in a research note on October 11, as cited by Business Insider. One AI ecosystem is forming around the U.S. and its key trading partners, while another is forming around China. This division is driven by geopolitical competition, national security concerns, and economic interests, the strategists believe.

Goldman Sachs highlighted the achievements of Chinese developers DeepSeek and Kimi in creating large language models, as well as the country's progress in semiconductor packaging, computing technologies, bioengineering, and the aerospace industry.

China is now not only supplying components and equipment for the global development of AI, but is also building its own ecosystem, which includes cutting-edge chips, open-source large language models, and AI-powered applications capable of competing with U.S. developments, analysts note.

“It is important to note that the technological gap between China and the West appears to be narrowing,” wrote Goldman Sachs strategists. That said, China still lags behind the leaders by several generations in the production of the most advanced semiconductors. However, in certain segments related to AI power supply, infrastructure, models, and physical applications of artificial intelligence, the country is likely already on par with or even ahead of its global competitors, according to Goldman Sachs.

Goldman Sachs divides Chinese AI companies into two categories. The first consists of exporters whose performance depends on Western companies’ spending on AI development. The second category consists of companies focused on the domestic market that benefit from domestic investment in AI, the spread of the technology, and government support.

Exporters' stock prices are more heavily influenced by global trends in AI investment and geopolitical risks. The performance of domestic-market companies is largely determined by China's spending on artificial intelligence and government decisions, according to the study.

These differences have already become apparent in the stock market. From early 2025 through June 2026, shares of Chinese AI exporters rose 126%, but then fell 23% from their peak levels during the global sell-off in tech stocks. Companies focused on the domestic market weathered the correction better, notes Goldman Sachs.

Since the beginning of 2025, followingthe so-called “DeepSeekmoment ” (the release by a Chinese developer of an AI model that outperformed one of OpenAI’s neural networks), the market value of Chinese publicly traded AI-related companies has increased by nearly $5 trillion thanks to rising stock prices and initial public offerings, according to Goldman Sachs. These companies now account for 42% of the total market capitalization of Chinese stocks traded on the mainland and in Hong Kong. In 2024, that figure stood at 24%. The share of AI companies in the total trading volume of Chinese stocks also rose—by 11 percentage points to 57%, according to the Goldman Sachs study.

This article was AI-translated and verified by a human editor