China is aggressively working to close the AI competitiveness gap with the United States. According to CEO of Chinese startup 01.AI Lee Kai-fu, the country is now as close as three months in some areas. This is because companies such as DeepSeek have figured out how to use chips and apply algorithms more efficiently.
Lee has told Reuters that startup DeepSeek has said that China has pulled ahead in areas such as infrastructure software engineering, severely challenging the US’s attempts to hold back China’s AI sector through its sanctions.
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“Previously I think it was a six to nine month gap and behind in everything. And now I think that’s probably three months behind in some of the core technologies, but actually ahead in some specific areas.”
-Lee Kai-Fu
At the same time, a report by MIT Technology Review reveals how 80% of China’s newly built computing resources remain unused.
“The growing pain China’s AI industry is going through is largely a result of inexperienced players—corporations and local governments—jumping on the hype train, building facilities that aren’t optimal for today’s need.”
-Jimmy Goodrich, senior advisor for technology to the RAND Corporation.
That said, energy is being wasted, data centers have become “distressed assets,” but the country is doing all it can to stay ahead in the AI arms race.
While sanctions from the US had been successful in curbing China’s progress toward AI, they were only successful in the short term. The country has now learned to operate under constraints, developing its own algorithms and open-sourcing technologies to reduce reliance on Western technology.
Some experts even assert that China’s open-sourcing strategy may become strong enough to challenge the West’s model of AI monetization.
“The fact that DeepSeek are able to figure out the chain of thought with a new way to do reinforcement learning is either catching up with the U.S., learning quickly, or maybe even more innovative now.”
-Lee
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10. Pony AI Inc. (NASDAQ:PONY)
Number of Hedge Fund Holders: 20
Pony AI Inc. (NASDAQ:PONY) specializes in autonomous mobility, offering AI-driven robotruck and robotaxi services, intelligent driving software, and vehicle integration solutions. On March 26, Analyst Ming-Hsun Lee of Bank of America Securities reiterated a Buy rating on the stock with a price target of $17.70. Despite facing hurdles such as declining revenues and increased R&D expenses, the firm is optimistic about Pony AI based on its growth potential.
In particular, the analysts believe that the company is poised for significant expansion in its Robotaxi fleet, which is anticipated to drive significant growth in service sales. In addition, the launch of Pony AI’s 7th-generation autonomous driving system is expected to enhance profitability, while partnerships with major auto manufacturers to develop new Robotaxi models will further enhance growth. All in all, Pony AI’s strategic initiatives, as well as its proprietary Virtual Driver technology, underpin the Buy rating.
9. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 63
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. On March 25, the company announced a strategic partnership with Everfox, a leader in cross-domain technology solutions. The partnership will provide enhanced cross-domain solutions for seamless connectivity and secure data sharing, where customers can improve joint command and control capabilities in classified network environments.
The partnership, tested and deployed already with existing customers, will now be extending to additional clients with complex network and operational environment needs. Everfox will apply cross-domain solutions to Palantir’s AI capabilities so that warfighters can rapidly process, decide, and react to real-time intelligence streamed from multiple sensors, platforms, and networks. It will also leverage Palantir’s Mission Manager along with its cross-domain solutions so that customers can maneuver different software across complex classified networks.
“We’re proud to partner with Everfox to enhance the warfighter mission. Our combined efforts will provide our customers with transformative operational efficiency, ensuring they remain at the forefront of technological advancements in defense.”
-Akash Jain, President of Palantir USG.
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