The AI Trade: Splitting into Two Worlds, According to Goldman Sachs
By Huileng Tan
China's AI ambitions are creating a second investment ecosystem alongside the US. (Michael M Santiago/Getty Images)
Oct 13, 2026, 9:09 AM GMT+2
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It may be time to rethink the AI trade as two increasingly distinct AI ecosystems emerge around the US and China, according to a new analysis from Goldman Sachs.
Two Distinct AI Ecosystems
"The narrative of a global AI duopoly is gaining traction among investors," wrote strategists led by Kinger Lau in a note published on Sunday. One ecosystem is centered on the US and its key trading partners, while the other is taking shape in China, reflecting geopolitical, national security, and growth considerations.
The bank pointed to breakthroughs by DeepSeek and Kimi in large language models, alongside advances in:
- Semiconductor packaging and computing
- Biological engineering
- Aerospace
China is no longer just a major supplier to the global AI buildout; it is also building an AI ecosystem spanning advanced chips, open-weight large language models, and AI applications that could compete with the US-led ecosystem, Goldman Sachs wrote.
"Importantly, the technology gaps between China and the West seem to be narrowing," the strategists wrote. While China remains several generations behind at the leading edge of semiconductors, it is "probably on par with, or even leading," global competitors in parts of AI power, infrastructure, models, and physical AI applications.
Reshaping AI Investment Framework
Grouping Chinese AI stocks into two categories further refines Goldman's AI investment framework:
- Exporters tied to Western AI spending: More sensitive to global AI investment trends and geopolitics.
- Domestic companies benefiting from China's own AI investment, growing adoption, and policy support.
Key Takeaways
- China's Rising AI Power: Narrowing technology gaps with the West in areas like semiconductors, AI models, and applications.
- Shifting AI Landscape: Two distinct AI ecosystems, reshaping investment strategies and frameworks.
- Geopolitical Implications: AI trade dynamics influenced by national security and geopolitical considerations.