Why Chinese Tech Is Prioritizing AI Adoption Over Model Performance

Chinese tech companies are releasing new AI models at a fast pace as competition with U.S. rivals grows more intense. However, for investors, the key issue is not which model tops a benchmark. Instead, the focus is on how AI is used to attract users, support existing platforms, and improve long-term business strength.Claim 50% Off TipRanks PremiumUnlock hedge fund-level data and powerful investing tools for smarter, sharper decisions Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential Over the past year, Chinese firms have moved quickly to narrow the gap with leaders like OpenAI, Anthropic, and Google (GOOGL). Their approach centers on speed, low-cost access, and tight links with consumer services. As a result, AI is becoming a growth tool rather than a standalone product. A Faster Cycle with Lower Costs Beijing-based Moonshot AI announced its Kimi K2.5 model this week, only three months after releasing an earlier version. The company said the model includes video creation and agent features that can handle tasks with little user input. Moonshot claims the model outperforms leading U.S. systems in coding and video tasks. At the same time, Alibaba Group (BABA) introduced Qwen3 Max Thinking, its most advanced reasoning model so far. Alibaba said the model performed well on a large benchmark test called Humanity's Last Exam. The company added that the system can choose the best AI tool for a task and use past chats to improve replies at a low additional cost. Earlier this month, Baidu Inc. (BIDU) released Ernie 5.0, with its shares rising to their highest level in nearly three years after the launch. Baidu said Ernie 5.0 outperformed Google Gemini 2.5 Pro in several areas. Though the firm did not compare it with Google Gemini 3 Pro. Another startup, Z.ai, released a free version of its GLM 4.7 model in January. Demand was so strong that the company later limited new users for its coding tool due to limited computing supply. Together, these releases reveal a clear pattern. Chinese firms are updating models faster and offering broad access at little or no cost. AI Built for Users, Not Headlines Unlike many U.S. models, Chinese AI systems are often open source and easy to adapt. This helps speed adoption, especially in regions with limited budgets. Microsoft (MSFT) said earlier this month that DeepSeek usage in Africa is two to four times higher than in other regions. Alex Lu, founder of LSY Consulting, said the goal is wide use rather than top scores. "The hope is countries apart from China will use these models to ensure large amounts of applications are built on these Chinese models," Lu said. This focus on users also explains why benchmarks matter less to local firms. Ivan Su, senior equity analyst at Morningstar, said paying too much attention to scores can distract from real value. He noted that AI becomes useful when it is built into games, media, and messaging platforms that people already use. Tencent Holdings Limited (TCEHY) is a clear example. The company runs WeChat, one of the most used apps in China. Ahead of the Lunar New Year, Tencent said it will give out one billion yuan, or about $140 million, through its Yuanbao AI app. The campaign mirrors past red envelope promotions that helped WeChat grow its payment business. Closing the Gap, With Limits Despite the progress, Chinese firms are not yet leading the global AI race. However, the gap appears to be shrinking. Google DeepMind chief executive Demis Hassabis told CNBC this month that Chinese AI models may be only "months" behind those built in the U.S. Still, the broader message is clear: Chinese tech firms are using AI to defend traffic, grow user base, and support core businesses as they pursue scale. We used TipRanks' Comparison Tool to compare notable traded companies that employ chatbots similar to Qwen, DeepSeek, and Ernie. It's an excellent tool to gain a broader perspective on each stock and the AI industry as a whole.