<div id="readability-page-1"><p>Eric Schmidt, former Chief Executive of Alphabet (GOOGL) (GOOG), recently warned that free Chinese AI models may become the global standard. Speaking on the Moonshots podcast, he pointed out that while the top U.S. models are mostly closed off, China's leading tools are open-source and free to use. As a result, many countries and businesses may choose Chinese options simply to avoid high costs. The interview comes while Baidu (BIDU) is releasing its newest AI model called ERNIE-4.5-VL-28B-A3B-Thinking, an open-source model it claims outperforms ChatGPT 5 <strong>(PC:OPAIQ)</strong>.</p><h3>Meet Your ETF AI Analyst</h3><ul><li> Discover how TipRanks' <i>ETF</i> AI Analyst  can help you make smarter investment decisions </li><li>   Explore ETFs TipRanks' users love  and see what insights the <b><i>ETF</i> AI Analyst</b> reveals about the ones you follow.</li></ul> <p>Downloads of these Chinese models are already ahead. According to <em>Bloomberg</em>, Qwen from Alibaba (BABA) has seen about 385 million downloads. That's more than Meta Platforms' (META) Llama, which has around 346 million. Chinese-origin tools now make up over 40% of new AI model releases on the developer platform Hugging Face.</p> <h2><strong>Global Companies Turn to China's AI Tools</strong></h2> <p>Even U.S. companies are using these Chinese systems. In October, Airbnb (ABNB) said it uses Alibaba's Qwen model to help with customer service. The company's Chief Executive said the tool is very good, fast, and low-cost. In another case, venture investor Chamath Palihapitiya said a firm he works with moved AI workloads to Moonshot AI's Kimi K2 model, also citing its lower price.</p> <p>These shifts highlight a new path in how businesses approach AI tools. It's not just about which model is smartest, but also about which one makes financial sense.</p> <h2><strong>Why This Matters for AI Stocks</strong></h2> <p>As more companies choose open models to cut costs, the competitive field may shift. Closed AI systems, like those from Microsoft (MSFT), Alphabet, and OpenAI, often come with license fees. That could affect demand and pricing power, especially outside the U.S., where many firms work with smaller tech budgets.</p> <p>Meanwhile, the debate over &#34;sovereign AI&#34; is also picking up. That term refers to countries wanting control over their own tech systems and data. Nvidia (NVDA) Chief Executive Jensen Huang recently said countries should build their own models to keep control over their future tech tools. He also noted that China is nearly at the same level as the U.S. in the AI field.</p> <p>In short, if low-cost models continue to gain use across regions and sectors, that could shape the next phase of the global AI market. For investors tracking AI-focused stocks like Microsoft, Alphabet, Meta Platforms, Nvidia, Baidu, and Alibaba, the rise of free open-source tools could become a key factor in adoption trends and global growth.</p> <p>We used TipRanks' Comparison Tool to line up and compare all the companies appearing in the piece that employ an AI chatbot similar to ChatGPT or Gemini.</p></div>

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<p>Eric Schmidt, former CEO of Alphabet, warns that free Chinese AI models could become the global standard, potentially eroding U.S. tech leadership. He highlighted that while U.S. models are mostly closed, China's tools are open-source and cost-effective. Companies like Airbnb are already using Chinese AI systems for customer service due to their efficiency and low cost. This trend may shift the competitive landscape, affecting demand for closed systems from U.S. firms. The rise of low-cost models could significantly influence the global AI market and investment strategies in AI stocks.</p>

- Eric Schmidt warned that free Chinese AI models may set a global standard, as they are open-source and accessible compared to U.S. models.  
- The release of Baidu's ERNIE-4.5-VL-28B-A3B-Thinking and the high download rates of Chinese models indicate a shift towards cost-effective AI solutions, with U.S. companies like Airbnb adopting these tools.  
- This trend could impact the competitive landscape for AI stocks, as businesses prioritize affordability over exclusivity, potentially reshaping the global AI market.

Ex-Google (GOOGL) CEO Eric Schmidt Warns Free Chinese AI Could Erode U.S. Tech Lead