AI Arms Race: U.S. vs China—These 4 Stocks Stand Out

Core Insights - The United States and China are engaged in a significant AI arms race, with China's DeepSeek demonstrating capabilities that challenge U.S. AI investments [1][2] - The revelation of DeepSeek's efficiency led to a substantial decline in AI stocks, erasing over one trillion dollars in market capitalization [2] - Chinese AI companies are reportedly outperforming their U.S. counterparts in 2025, despite trade sanctions limiting access to advanced technologies [3] Company Summaries Microsoft - Microsoft has invested nearly $13 billion in OpenAI, acquiring a 49% stake and receiving 75% of OpenAI's profits until it recoups its initial investment [5][6] - Shares of Microsoft are down 9.3% year-to-date as of April 2, 2025 [6] Alphabet (Google) - Alphabet's AI chatbot, Gemini, has gained significant traction with an estimated 200 million monthly active users and offers a subscription model similar to ChatGPT [7][8] - Shares of Alphabet are down 17.2% year-to-date as of April 2, 2025 [8] Baidu - Baidu's Ernie AI, launched in March 2023, has gained over 100 million users and is positioned as a competitor to ChatGPT [10][11] - Baidu claims its Ernie models can perform tasks at half the cost of DeepSeek, with shares up 8.3% year-to-date as of April 2, 2025 [11] Alibaba - Alibaba launched its LLM, Qwen, in April 2023, which can process multiple data types and is claimed to outperform DeepSeek and GPT-4o [13][14] - Alibaba's shares are up 53.1% year-to-date as of April 2, 2025 [14]