China’s AI is getting cheaper and stronger but Satya Nadella says US still has one big advantage

The race between the US and China in artificial intelligence is no longer just about building the most powerful models. Chinese AI companies have been releasing increasingly capable systems that are putting pressure on American rivals, forcing a wider debate over what will keep the US ahead.

Last year, Chinese AI lab DeepSeek created a massive $1 trillion sell-off in tech stocks after showing that China could build advanced AI models at a much lower cost. More recently, Moonshot AI’s Kimi K3 grabbed attention for its coding, reasoning, and knowledge work abilities, with many comparing it to models from OpenAI and Anthropic.