Citigroup says the technology gap between Chinese and leading global artificial intelligence models is narrowing, with advancements from Tencent Holdings Ltd. and Alibaba Group Holding Ltd. making them viable alternatives and intensifying competition.
"The advanced architecture demonstrated by DeepSeek-V4 is pointing to a broader trend, indicating that the technological gap is narrowing," Citigroup analysts said in a research report.
The report highlighted different strengths, noting Tencent's Hunyuan HY 3.0 model is focused on real-world application scenarios, while Alibaba's Qwen 3.6-Max model shows strong performance in more complex coding and reasoning tasks. This specialization is helping Chinese firms carve out niches against global competitors, with other domestic models like DeepSeek also showing advanced architecture.
The assessment reinforces the investment case for the two Chinese tech giants, with Citi maintaining "Buy" ratings on both stocks. This suggests that despite a fierce race, China's top tech firms are making enough progress in the critical AI sector to attract and retain investor confidence, potentially supporting their valuations as they become credible challengers to US-based leaders.
This article is for informational purposes only and does not constitute investment advice.
