1、Barclays Capital Inc.and/or one of its affiliates does and seeks to do business with companiescovered in its research reports.As a result,investors should be aware that the firm may have aconflict of interest that could affect the objectivity of this report.Investors should consider thisreport as on

2、ly a single factor in making their investment decision.Please see analyst certifications and important disclosures beginning on page 27.China Technology,U.S.Internet&U.S.Equity StrategyAI:East vs.WestChinas AI tech is powered by open-source,low-cost modelsthat support widespread local adoption.Compu

3、teadvantages keep the US ahead near term,but China staysclose.Structural capex gaps and monetization differencesfavor US ROIC,yet Chinas long-term AI outlook remainsstrong.The following companies are privately held and are not under coverage by Barclays Research:OpenAI,DeepSeek,and Bytedance.Informa

4、tion about these companies is being provided forinformation purposes only and is not an investment recommendation by Barclays Research.The progress of Chinese AI over the past 12-18 months has been nothing short of astounding,and we expect the narrative to only improve from here.Open source collabor

5、ation among theleading labs has allowed China to close the gap with Western models despite significantdeficiencies in AI compute.Looking ahead,we expect the US labs to jump ahead in 26 on theback of the GPT-6 equivalent models,but we expect China to remain close behind.Chinas AIadoption among consum

6、ers and enterprise trails the West(200m DAU vs.500m)and likelyreflects some of the constraints around hyperscaler capacity,but we expect adoption to mirrorthe mobile internet over the long term.In summary,despite some structural differences,ChinasAI future looks very bright.Key Points&Highlights:Chi