U.S. Leads China In AI Investments By Wide Margin

The China-U.S. race to lead in artificial intelligence (AI) is back in the spotlight. Chinese AI stocks appear to be in demand again after e-commerce and cloud-computing giant Alibaba’s earnings beat expectations, Barron’s Daily reported.

Sustaining a long-term lead over China may be challenging for the US. I Photo: Leon Lee Flickr

Ryan Cohen, the activist investor who helped trigger the GameStop meme-stock craze, seems to think so.

He raised his stake in Alibaba to $1 billion, according to The Wall Street Journal, which could have many of his retail investor followers wondering whether to follow suit. There are tailwinds.

Tech appears to be back in favor with Beijing after Alibaba founder Jack Ma was pictured at a recent meeting with President Xi Jinping, suggesting that the regulatory crackdown on the sector is a thing of the past.

AI startup DeepSeek demonstrated that Chinese models can compete with Western rivals. And China has a strong record of innovation—consider the growth of “superapps” such as WeChat or the rise of TikTok.

However, sustaining a long-term lead may be challenging. Alibaba’s quarterly revenue growth may have been its fastest since late 2023, but a 13% increase in cloud-computing revenue pales in comparison to Microsoft’s Azure and Google Cloud, which are growing at 30% rates.

Alibaba stated that, over the next three years, its investment in cloud computing and AI infrastructure is expected to exceed that of the past decade.

Analysts at Jefferies estimate this investment to be more than $40 billion over the period.

By comparison, Amazon plans to spend $105 billion this year alone. A significant portion of that will be allocated to Nvidia’s next-generation chips—technology that Chinese companies will not have access to.

Nvidia’s earnings next week should indicate that the pace of AI innovation in the U.S. isn’t slowing down, potentially making it difficult for China to keep up, even if its tech leaders can adapt to the evolving demands of the ruling Communist Party.