China is increasingly catching up with the United States in the global race for artificial intelligence leadership despite a 23-fold US investment advantage, according to Stanford University's latest AI Index report, a turning point that signals the end of a long-assumed US lead in AI.

The AI Index is an initiative at the Stanford Institute for Human-Centered Artificial Intelligence. In its eighth edition last year, it found that even though Chinese AI models were fast catching up in performance, the US was still dominant in the sector.

However, the 2026 report said that the AI model performance gap between the US and China has "effectively closed", and leading systems from both countries have traded top positions multiple times since early 2025.

US private AI investment reached about $285.9 billion in 2025, more than 20-fold that of China's disclosed total. Yet the report suggests that financial firepower is no longer translating into a decisive technological edge.

The shift is already being acknowledged by US Treasury Secretary Scott Bessent, who said earlier this week the US lead in AI may now be as narrow as three to six months.

The US maintained a lead in frontier model development in 2025, producing 50 major AI systems compared with China's 30, according to the report.

In February 2025, China's Deep-Seek-R1 briefly matched the best-performing US system, while by March 2026, San Francisco-based Anthropic's top model led by just 2.7 percent.

But the balance shifts sharply when measured by scale and research depth. China is rapidly consolidating its position across the broader innovation pipeline, with a growing dominance in high-impact papers and intellectual property.

In 2024, China accounted for 74.2 percent of all AI patents granted globally — 97,206 out of 131,121 — marking a dramatic rise from a decade ago. The US, which held a 42.8 percent share in 2015, has seen its portion fall to 12.1 percent.

The pattern is similar in academic output. China contributed 17.8 percent of global AI research papers in 2024, more than double the US share of 7.6 percent. Its influence is also deepening: China's share of citations, a proxy for research impact, reached 20.6 percent, compared with 12.6 percent for the US.

At the highest tier, the shift is becoming more pronounced. Chinese institutions accounted for 41 of the world's 100 most-cited AI papers in 2024, up from 33 in 2021. Over the same period, the US presence declined from 64 to 46, reflecting a gradual rebalancing of influence at the top of the field.

Notably, the report highlighted a structural divergence in how the two countries develop AI.

In the US, innovation is concentrated in a small number of well-funded private labs that produce the most advanced models. In China, development is more distributed, driven by coordinated efforts across academia, industry and government.

That approach has delivered breadth and speed of deployment. China leads in industrial robot installations and real-world AI integration, helping embed the technology across manufacturing and services at scale.