Banking giant Morgan Stanley says American AI models are leaving their Chinese counterparts in the dust following a massive leap in capability.
In a new episode of Morgan Stanley’s Thoughts on the Market podcast, the bank’s global head of thematic and sustainability research, Stephen Byrd, lays out what he calls “two worlds” forming inside the AI ecosystem.
Citing the bank’s own research, Byrd says a small group of American AI developers now operates at a scale that separates them from the rest of the pack.
“On LLM progress, we do think that the handful of American LLM developers that have 10 times the compute they had last year are going to be training and producing models of unprecedented capability. We do not think the Chinese models will be able to keep up because they simply do not have the compute required for the training.
And so we will see two worlds, very different approaches.”
But Byrd says that China should not be counted out of the race, as Chinese developers have taken a different path.
“That said, the Chinese models are quite excellent in terms of providing low-cost solutions to a wide range of very practical business cases. That’s one case of two worlds when we think about the world of AI and tech diffusion.”
China’s top AI leaders mirror Morgan Stanley’s view. Last month, executives and researchers from China’s leading AI firms said the Asian giant’s odds of overtaking the US in the AI race are below 20%. They cited constrained access to next-generation chips, along with US export controls and limited budgets, as the primary headwinds.
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