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In the first week of February 2026, nearly $1 trillion was wiped from software and services stocks. An analyst at Jefferies coined it the “SaaSpocalypse.” The Carnage Salesforce: Shed a quarter of its value year-to-date ServiceNow: Lost 25% despite beating earnings for nine straight quarters Thomson Reuters: Dropped 16% S&P 500 Software & Services Index: […]

The Chinese AI market is not a single race but a multi-dimensional competition. Three scenarios emerge from the structural dynamics, each with different implications. Scenario 1: Distribution Dominance Persists (65% Probability) Big Tech platforms maintain consumer AI dominance through super-app embedding. Model layer continues to commoditize. Platforms go model-agnostic as standard practice. Startups in the

While consumer AI chatbots dominate headlines, the more consequential battle is in the cloud infrastructure market — the enterprise gateway where AI margins are actually captured. Market Landscape: $7.3B at 26.8% CAGR Alibaba Cloud — 35.8%: Decisive leader leveraging first-mover advantage and deep enterprise relationships across retail, logistics, and financial services Volcano Engine (ByteDance) —

Between the platform pole and the frontier pole lies a dangerous middle ground — home to well-funded but structurally vulnerable AI startups that lack both the distribution moats of Big Tech and the frontier capabilities of DeepSeek. The Trapped Startups Moonshot (Kimi Chat): Backed by Alibaba and Tencent — the same companies it would need

The most consequential shift in China’s AI economy isn’t happening in model benchmarks — it’s happening at the transaction layer. Agentic commerce is the emerging battleground where chat becomes transaction, and AI stops being an interface and becomes an operator. The Connected Services Ecosystem JD.com (e-commerce): Ernie integrated for AI-powered shopping Meituan (food delivery): Multi-model

Huawei is executing a full sovereignty play — the most ambitious vertical integration strategy in the Chinese AI ecosystem. The goal: complete independence from foreign technology across the entire AI stack. The Ascend Chip Strategy The Ascend 910C commands 35-40% domestic AI chip market share, projected to reach 50% by 2026. Production is scaling from

DeepSeek stands alone. With an Intelligence Index of 68 — leading all Chinese models — 143M MAU, and R1 trained for approximately $6M versus GPT-4’s $100M, DeepSeek represents pure frontier research backed by a hedge fund, not Big Tech. The January 2025 Shock DeepSeek was not on the Hurun Top 50 AI companies in 2024.

Four giants dominate consumer AI in China through super-app distribution. Each leverages a different ecosystem strength, but all share the same playbook: embed AI into daily workflows, subsidize inference costs, capture value at the transaction layer. Alibaba: Full-Stack Integration Tongyi Qianwen commands 150M MAU, powered by Qwen3 (Intelligence Index: 62). With 35.8% cloud market share

The Chinese AI market is not a single race but a multi-dimensional competition across seven layers, three archetypes, and evolving time horizons. The next 2-3 years will be decisive. The Three-Way Race Three archetypes compete with different strategies: Big Tech Platforms — embed AI into super-apps, zero-margin inference, model-agnostic hedging. Advantage: 1B+ daily touchpoints. Frontier

Value concentrates at two poles—platform distribution and frontier research—while the middle gets squeezed. This is the defining structure of the Chinese AI economy. Platform Pole Players: Alibaba, ByteDance, Tencent, Baidu Moat sources: Super-app ecosystems with 1B+ daily touchpoints Zero-margin inference economics Data flywheel effects that compound over time User habits and switching costs Strategy: Embed

The Chinese AI economy is defined by a fundamental question: Does platform distribution or frontier capability determine market outcomes? The Distribution Thesis Big Tech platforms leverage super-app ecosystems with 1B+ daily touchpoints, zero-margin inference economics, and data flywheel effects. Distribution wins under three conditions: AI is a feature, not a product—embedded in existing workflows Output

Understanding the Chinese AI economy requires viewing it as a vertically integrated stack. Value flows differently at each layer, and strategic positioning depends on understanding these dynamics. Layer 7: Consumer Interfaces Super-apps, chatbots, and embedded AI experiences. Market size: $11.5B with 42.3% CAGR. Leaders: Ernie (200M MAU), Doubao (157M), Tongyi (150M), DeepSeek (143M). Projection: 1B+

The Chinese AI economy has emerged as a vertically integrated ecosystem where platform distribution—not model capability—determines consumer market share. This analysis provides a comprehensive view of the market architecture, competitive dynamics, and strategic implications. The core thesis is straightforward: Big Tech platforms (Alibaba, ByteDance, Tencent, Baidu) leverage super-app ecosystems to dominate consumer AI, while frontier