The AI race is changing. The smartest investment may not be the obvious one.
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Hello reader.
Remember the DeepSeek shock of January 2025? When Chinese AI lab DeepSeek launched its DeepSeek-R1 logic model, global markets were rocked.
The model showed that the Chinese company could compete with the best AI systems in Silicon Valley at a much lower cost.
Now China has presented the second part.
Sunday, Alibaba Group Holding Limited (Daddy) has unveiled a preview of its latest AI model, the Qwen3.8 Max. The company says Qwen3.8 Max is among the most powerful AI models in the world, trailing only Anthropic’s Fable 5. Alibaba shares rose more than 5% on Monday following the news.
The launch came shortly after Chinese startup Moonshot AI launched the Kimi K3, another model competing with the best AI systems in the US. In benchmark tests, the Kimi K3 outperformed the top model from Anthropic and OpenAI’s GPT-5.6 Sol on some programming tasks.
American companies are racing to build the smartest artificial intelligence models. China proves that AI doesn’t always need to be the best.
It must be “good enough,” cheaper, and easier to adopt.
This is the same playbook that China used with electric cars: build products that are almost as good, sell them much cheaper, and then win global market share.
per day Smart moneyLet’s take a look at why AI is China’s next electric vehicle export story.
Next, I’ll explain why the biggest investment opportunities may not come from the companies that have the best technology — but from the companies that operate them.
Playbook from EV to AI
Around 2010, long before the electric vehicle market took off, China invested heavily in the industry. This has given Chinese companies years to improve before facing intense global competition.
Unlike the United States, where Tesla company (TSLA) After China became the dominant player in the field of electric cars, it encouraged dozens – even hundreds – of electric car makers to compete.
They competed on cost.
Chinese automakers have realized that they don’t need to build the best cars in the world. They just needed to build it well enough, and at half the price.
Once they built strong businesses at home, automakers expanded abroad into markets where demand for affordable electric vehicles is growing. Today, Chinese electric cars are popular throughout Europe and other international markets. (In fact, I recently traveled to Europe, where I saw them everywhere).
Now, China appears to be applying the same rules to artificial intelligence.
The recent Kimi K3 and Alibaba Qwen announcements are attracting attention because they suggest that China’s approach to electric vehicles could work in the field of artificial intelligence as well:
Build powerful technology. Cost reduction. Facilitating the adoption of companies around the world.
Just a year ago, most AI discussions focused on OpenAI, human, Alphabet Company (Google), and Meta Platforms Inc. (dead). Investors are now also keeping an eye on Alibaba, Moonshot AI, DeepSeek, MiniMax, and Z.AI.
These companies prove that AI doesn’t always need to be the absolute best to win customers. Rather than beating Anthropic by a small percentage, the Qwen3.8 Max and Kimi K3 try to be just as efficient while being significantly cheaper and easier to deploy.
Alibaba’s Qwen3.8 Max and Moonshot AI’s Kimi K3 are open-weight models, meaning businesses can download and run them locally instead of paying for access through a third-party service.
For companies that use AI heavily, this could make it more attractive than Anthropic’s Claude or OpenAI’s ChatGPT.
We were Watch this “good enough” trend. Here in Smart moneyAnd now we’re really starting to see that happen. Information reported on Monday that Microsoft Corporation (MSFT) He is testing the Kimi K3 inside the Copilot AI Assistant. If successful, the move could save Microsoft up to $600 million by reducing its use of more expensive AI models like ChatGPT and Cloud.
For many companies, this is the main advantage.
As more developers use Chinese AI models, they attract more users, more improvements, and more investment.
If China can build AI that is just as good, much cheaper, and easier to adopt globally — as it has done with electric cars — it could capture a significant share of the worldwide AI market.
This does not necessarily make American AI companies losers. OpenAI, Anthropic and others may continue to lead in performance. But he suggests that the world of AI could be a lot like the electric car market: premium American models at the end of the day, and cheaper Chinese models competing on price and accessibility.
If the AI market follows a similar path, investors should remember an important lesson from the electric vehicle revolution…
Forget the creators. Own enablers.
It can be tempting to go after the companies that are getting the most attention. But history shows that revolutionary technologies often create greater opportunities for companies that supply picks and shovels.
The same lesson applied during the electric car revolution. In October 2019, I took a closer look at Tesla, the electric car industry’s biggest success story. I wrote to my country Fry investment report Subscribers:
Every automaker on the planet is retooling itself to launch its own electric vehicles.
The onslaught of competing electric vehicle models coming to the market over the next couple of years is truly astonishing. Tesla will struggle to fend off this attack.
The company is undeniably innovative, but that doesn’t mean it will survive to lead the new era it has led. “First movers” like Tesla often succumb to the creative energies they unleash.
So I say: Why don’t we sell Tesla and buy the dynamic companies that will power and nurture the second electric revolution?
It is expected that the global boom in electric vehicles will lead to a significant increase in demand for copper. Electric vehicles require about four times the amount of copper as a typical internal combustion vehicle. Therefore, as they continue to gain market share, they will absorb an increasing slice of the global copper supply.
That’s when I recommended the play Picks and Shovels to readers: Freeport-McMoRan Corporation (FCX). Copper shares have risen over 260% since then, and we’ve notched several triple-digit gains along the way.
I play AI Revolution the same way.
Multiple shares in my country Fry investment report The wallet offers this type of opportunity.
These companies include major copper and aluminum producers, and several ETFs that own baskets of stocks operating in the uranium and nuclear industries… the solar industry… and the wind energy industry.
This is just to name a few.
China may challenge US dominance in AI with cheaper and “good enough” models. But these pick-and-roll plays could benefit regardless of who leads the AI race.
I think they offer compelling opportunities at their current prices.
To learn how to access these names, simply click here.
It is considered,
Eric Fry
