Investors may need to reassess their AI investment strategies as two separate AI ecosystems crystallize around the United States and China, according to fresh analysis from Goldman Sachs.
“The concept of a global AI duopoly is gaining momentum among market participants,” noted strategists headed by Kinger Lau in a Sunday research note.
One ecosystem revolves around the US and its primary trade allies, while the other is coalescing in China, driven by geopolitical dynamics, national security imperatives, and growth trajectories, the analysts explained.
The bank highlighted breakthroughs from DeepSeek and Kimi in large language models, along with progress in semiconductor packaging, computing, biological engineering, and aerospace sectors.
China has evolved beyond being merely a key supplier for global AI infrastructure, Goldman emphasized.
It is simultaneously constructing an AI ecosystem encompassing advanced chips, open-weight large language models, and AI applications that could rival the US-dominated ecosystem, Goldman Sachs stated.
“Crucially, the technological disparities between China and Western nations appear to be shrinking,” the strategists observed.
Although China lags several generations behind at the cutting edge of semiconductors, it is “likely on par with, or potentially surpassing,” global rivals in segments of AI computing power, infrastructure, models, and physical AI implementations, they added.
Categorizing Chinese AI Equities
This shifting terrain is transforming Goldman’s AI investment approach.
Instead of viewing AI as a unified global investment theme, Goldman segments Chinese AI stocks into two categories: exporters linked to Western AI expenditure and domestic firms benefiting from China’s indigenous AI investment, expanding adoption, and policy backing.
Export-oriented companies show greater sensitivity to global AI investment patterns and geopolitical developments, while domestically focused firms correlate more closely with Chinese AI spending and government policy, Goldman’s strategists noted.
These distinctions are already evident in market behavior.
Chinese AI exporters surged 126% from early 2025 through June 2026 before declining 23% from their peak amid the global AI selloff.
Domestic AI enterprises have demonstrated better resilience since the correction, per Goldman’s analysis.
Since the “DeepSeek moment” in early 2025, nearly $5 trillion in market value has materialized in Chinese AI-related public equities through share appreciation and IPOs, according to Goldman.
AI-related stocks now represent 42% of the combined market capitalization of Chinese stocks listed in mainland China and Hong Kong, up from 24% in 2024, according to Goldman Sachs.
Their proportion of trading volume has climbed to 57% from 48%.