China’s artificial intelligence industry is seeing rapid adoption of its homegrown models, but the pace of monetisation remains well behind that of leading US developers, raising questions over whether lofty startup valuations can be justified by current revenues.
US research firm Rhodium Group estimated that all major Chinese AI models combined generate only about 10% of the revenue reported by OpenAI and Anthropic.
The comparison uses annual recurring revenue, or ARR, an industry metric that annualises a recent monthly revenue figure to capture fast-growing businesses.
The measure can therefore change quickly as usage and commercial adoption expand.
Among major Chinese AI companies, DeepSeek had the lowest estimated ARR at $500 million, according to Rhodium.
MiniMax followed at $800 million, while Moonshot’s ARR was estimated at $1 billion.
Z.ai told investors on Wednesday that its latest ARR had reached $1.8 billion, according to a transcript seen by CNBC.
Even after including estimated ARR of $4 billion for ByteDance and $2.4 billion for Alibaba, China’s leading AI companies remain well behind their US counterparts.
Rhodium estimated OpenAI’s ARR at $40 billion and Anthropic’s at $65 billion.
Valuations raise questions
The revenue gap becomes more significant when compared with the valuations attached to some Chinese AI startups.
“Valuations relative to revenue appear exorbitant for Moonshot and DeepSeek at present,” the Rhodium report said.
The research firm estimated valuation-to-revenue ratios of 50 times for Moonshot and 163 times for DeepSeek.
Those multiples compare with 34 times for OpenAI and 21 times for Anthropic, according to the report.
The disparity is emerging as several AI companies prepare for potential public-market debuts.
Anthropic is reportedly expected to list in the US next month, while OpenAI has pushed its IPO plans to next year.
Moonshot has reportedly filed confidentially for a Hong Kong listing, while DeepSeek is also reportedly preparing for an IPO.
Open-source models complicate monetisation
One of the central differences between China’s AI market and the US is the business model surrounding the underlying technology.
Chinese developers have increasingly relied on open-source models, allowing third parties with sufficiently capable hardware to download and run them independently.
That can accelerate adoption but also makes it harder for model developers to capture revenue from every use.
Rhodium said Chinese AI labs are exploring ways to take a larger share of revenue generated by third parties that provide access to their models.
By comparison, leading US models from OpenAI and Anthropic are predominantly closed.
Their services also command significantly higher prices per task than many Chinese alternatives, according to AI-comparison firm Artificial Analysis.
“The financing gap means it will be far more difficult for Chinese frontier AI labs to scale sustainably,” Logan Wright, partner at Rhodium Group, said in a statement to CNBC.
“They will be heavily dependent upon a favorable climate in the equity market—historically that’s not an easy bet in China,” he said.
“Government funding has been helpful on the hardware side of the buildout of compute capacity, but similarly will probably balk at direct funding for the frontier labs.”
Rhodium estimated that more than 60% of equity investment in Chinese AI chips and servers came from state-affiliated sources.
China’s AI capex could double this year but chip shortages remain a constraint
The research firm also said the scale of China’s AI buildout remains only around 15%-20% of the level of US investment.
“We expect China’s AI capex to double this year to 932 billion yuan ($139 billion) and to top 1.2 trillion yuan ($193 billion) in 2027,” the report said.
Chip shortages have been a major constraint on that spending.
Tencent’s capital expenditure, for example, trended lower in 2025 after a brief pickup late in 2024, with difficulties obtaining AI chips contributing to the slowdown amid shifting US export controls.
That picture has begun to change in 2026.
Domestic chip supplies from SMIC have increased, while access to Nvidia H200 chips appears to be easing.
Chinese companies have also been able to access advanced chips through third countries.
Chip access could drive the next phase
The improving supply environment is expected to support faster infrastructure investment.
Rhodium expects China’s AI infrastructure capex growth to accelerate in 2026 from 33% growth in 2025.
Alibaba, Tencent and Baidu together spent 208 billion yuan on capital expenditure in the first half of 2026, exceeding expectations set at the beginning of the year, according to the report.
H200 shipments from August are expected to provide additional support to spending in the second half of the year.
However, the outlook remains vulnerable to renewed US-China tensions, which could restrict access to advanced chips or close remote-access loopholes.
Z.ai, meanwhile, has raised its own revenue expectations, saying it now expects ARR to reach $3 billion by the end of the year, compared with its previous forecast of $2.4 billion.
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