China's rapidly expanding artificial intelligence sector is beginning to produce clear leaders as companies compete to improve large language models and expand enterprise adoption.
The race has intensified this year as Chinese developers accelerate releases of new models while businesses increasingly adopt generative AI tools.
Goldman Sachs has identified three preferred Chinese artificial intelligence model developers, with Hong Kong-listed Zhipu emerging as its top publicly traded pick, CNBC detailed. The investment bank initiated coverage on Zhipu, also known as Knowledge Atlas, with a neutral rating and a price target of HK$1,880, representing nearly 15% upside from the stock's closing price on Friday.
The investment bank's other preferred Chinese AI model developers are DeepSeek and ByteDance, both privately held companies, according to a separate Goldman Sachs research report released Friday. Analysts evaluated AI models using measures including time to market, Arena score, valuation, pricing and video-generation capabilities.
Zhipu has attracted increased attention in recent weeks following the release of its open-source GLM-5.2 model, which, CNBC reported, has been viewed as competitive with Anthropic's Fable 5 across several performance benchmarks. Goldman Sachs analysts said the company's growing adoption among enterprise customers and software developers supports continued upgrades to its models.
"With its latest GLM5.2 model reaching near-frontier performance that has seen significant ramp-up in domestic enterprise & global SME adoption, we believe its extensive usage by coders will enable Zhipu to sustain high frequency of further model upgrades," Goldman Sachs said in comments published by CNBC.
The firm's broader review also found that Zhipu's GLM models and DeepSeek's offerings generally ranked ahead of competing models from Alibaba, Tencent and Minimax in areas including development speed and Arena score. For AI video generation, ByteDance received the highest ranking among the companies evaluated.
China's AI developers continue to narrow the performance gap with leading global models. Reuters reported earlier this year that Chinese companies have accelerated open-source AI development despite U.S. export controls limiting access to some advanced chips, increasing competition within China's domestic AI market.
Market performance has reflected the shifting competitive landscape. Over the past 60 trading days, Zhipu shares have climbed about 70%, while Minimax has fallen more than 70%. Alibaba shares have declined nearly 10% during the same period, while Tencent has slipped roughly 5%.
Open-source development has become an increasingly important part of China's AI strategy. The Financial Times reported in recent months that Chinese developers have expanded the availability of open-weight models to encourage broader adoption by businesses and developers, even as the country faces restrictions on acquiring the most advanced U.S.-designed AI chips.
According to Goldman Sachs, China's open-source and open-weight AI models are approaching a critical stage in intelligence performance relative to proprietary global models. The analysts said demand for cost-effective AI systems has grown alongside wider adoption of agentic AI applications, while access to computing resources remains an important factor shaping the industry's development.
