This earnings season, the cost of AI started showing up in the numbers. Meta, Shopify, Spotify, and Pinterest all flagged rising AI and inference costs as a drag on margins. Shopify said economies of scale were “partially offset by increased LLM costs.”

This is the bill coming due for the pricing model that underpins OpenAI’s and Anthropic’s expected IPO valuations, both projected north of $800 billion. Those numbers assume OpenAI and Anthropic will hold their market share and pricing power — that competitors can’t easily catch up, and that enterprise customers will keep paying a premium because there’s no real alternative.

But increasingly the data is pointing the other way. Cutting-edge AI is becoming abundant and cheap. Chinese labs are charging a fraction of what American labs do for comparable work, while a wave of Western challengers — Nvidia, Cohere, Reflection, Mistral — are building cheaper, smaller, more efficient alternatives for enterprises that won’t touch a Chinese model. By the time OpenAI and Anthropic file their prospectuses, with OpenAI’s confidential filing coming as soon as this week, the central premise of their valuations may already be gone. — Read More

It’s essential that the US and its allies stay ahead of authoritarian governments like the Chinese Communist Party, or CCP. AI will soon become powerful enough to be used to repress citizens at unprecedented scale, and even to alter the balance of power among nations. And since AI is advancing more quickly by the day, we have only a limited period of time to set the conditions of the competition—and determine whether and how those threats materialize. It’s with this in mind that we outline what’s required to ensure America stays ahead.

The most important ingredient for developing AI is access to the computer chips on which the models are trained (or “compute”). Since the most capable chips are developed by American companies, the US government currently limits China’s supply by enforcing tight export controls on them. Recent history suggests these controls have been incredibly successful. In fact, AI labs in China have only built models close in intelligence to America’s because of their talent, their knack for exploiting loopholes around these export controls, and their large-scale distillation attacks that illicitly extract the innovations of American companies.

In this post, we present two scenarios for what the world might look like in 2028, when we expect transformative AI systems to have arrived. — Read More

Since 2023, every model at the frontier of AI capabilities, as measured by the Epoch Capabilities Index, has been developed in the United States. Over that same period, Chinese models have trailed US capabilities by an average of seven months, with a minimum gap of four months and a maximum gap of 14. — Read More

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For the last half-decade, the prevailing narrative in Silicon Valley has been one of absolute, unassailable dominance. The United States possesses the GPUs, the capital, and the talent. Everyone else is merely playing catch-up, drafting behind the aerodynamic wake of OpenAI and Google. That narrative just hit a wall.

A rigorous new study by researchers at MIT, Hugging Face, and others has analyzed the complete history of model downloads—2.2 billion of them—to trace where the actual power lies in the ecosystem. The results are not just surprising. They represent a fundamental inversion of the status quo.

According to the data, China has officially overtaken the United States in the global market share of open model downloads. In the last year alone, Chinese organizations captured 17.1% of the download market, surpassing the US share of 15.8%. — Read More

The United States and China are often said to be in a “race” with one another with respect to artificial intelligence. In a sense this is true, but the metaphor manages to miss almost all that is interesting about US-China dynamics in emerging technology. Today I’d like to offer some brief thoughts about how I see this “race” and where it might be headed.

All metaphors are lossy approximations of reality. But “race” is an especially inapt metaphor for this context. A race is a competition with clear boundaries and a clearly defined finish line. There are no such luxuries to be found here. Beyond the rhyme, “the Space Race” made intuitive sense because the objective was clear: landing humans on the Moon.

Stating that there is an “AI race” underway invites the obvious follow-up question: the AI race to where? And no one—not you, not me, not OpenAI, not the U.S. government, and not the Chinese government—knows where we are headed. — Read More

On September 11, the U.S. Federal Trade Commission launched an inquiry into seven tech companies that make AI chatbot companion products, including Meta, OpenAI, and Character AI, over concerns that AI chatbots may prompt users, “especially children and teens,” to trust them and form unhealthy dependencies.

Four days later, China published its AI Safety Governance Framework 2.0, explicitly listing “addiction and dependence on anthropomorphized interaction (拟人化交互的沉迷依赖)” among its top ethical risks, even above concerns about AI loss of control. Interestingly, directly following the addiction risk is the risk of “challenging existing social order (挑战现行社会秩序),” including traditional “views on childbirth (生育观).”

What makes AI chatbot interaction so concerning? Why is the U.S. more worried about child interaction, whereas the Chinese government views AI companions as a threat to family-making and childbearing? The answer lies in how different societies build different types of AI companions, which then create distinct societal risks. Drawing from an original market scan of 110 global AI companion platforms and analysis of China’s domestic market, I explore here shows how similar AI technologies produce vastly different companion experiences—American AI girlfriends versus Chinese AI boyfriends—when shaped by cultural values, regulatory frameworks, and geopolitical tensions. — Read More

There is now a path for China to surpass the U.S. in AI. Even though the U.S. is still ahead, China has tremendous momentum with its vibrant open-weights model ecosystem and aggressive moves in semiconductor design and manufacturing. In the startup world, we know momentum matters: Even if a company is small today, a high rate of growth compounded for a few years quickly becomes an unstoppable force. This is why a small, scrappy team with high growth can threaten even behemoths. While both the U.S. and China are behemoths, China’s hypercompetitive business landscape and rapid diffusion of knowledge give it tremendous momentum. The White House’s AI Action Plan released last week, which explicitly champions open source (among other things), is a very positive step for the U.S., but by itself it won’t be sufficient to sustain the U.S. lead.  — Read More

We keep hearing that China is catching up with the West in AI compute. A great example of this comes from NVIDIA’s CEO Jensen Huang, who recently claimed that China has made “enormous progress” in the last few years, and that “China is right behind us. We’re very, very close.”

And China has indeed been making a ton of progress. As we’ll see, Chinese hardware has been closing the gap across a range of metrics relating to computational power and data transfer, both of which are crucial aspects of AI workloads.

But despite progress on these metrics, we don’t think China is about to leap ahead of the West on AI compute. China’s top developers—including Alibaba, ByteDance, Baidu, and DeepSeek—still rely primarily on NVIDIA chips. And major bottlenecks still remain before China can leap ahead. — Read More

America is in a race to achieve global dominance in artificial intelligence (AI). Winning this race will usher in a new era of human flourishing, economic competitiveness, and national security for the American people. Recognizing this, President Trump directed the creation of an AI Action Plan in the early days of his second term in office. Based on the three pillars of accelerating innovation, building AI infrastructure, and leading in international diplomacy and security, this Action Plan is America’s roadmap to win the race. — Read More

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