AI Bubble: US Companies And Tech Firms Are Switching To Cheaper Chinese AI Models As American Costs Surge
IBM and Intel stocks are collapsing -- two companies the Trump administration took direct stakes in.
The colloquial “AI Bubble,” as it has been called, is coming under further pressure after it has been revealed a growing number of large American companies and tech firms are quietly no longer using domestic American AI models, and are switching to cheaper Chinese models instead, as the use cost of American models are increasing.
“Chinese AI models are particularly attractive to American companies now as AI costs skyrocket,” Kyle Chan, fellow in the John L. Thornton China Center at think tank Brookings, told CNBC. “Where previously U.S. companies were prioritizing AI adoption regardless of model, now they’re getting more cost-conscious.”
Futurism reported:
As corporate AI bills spiral out of control, many companies are beginning to ask themselves a simple question: why pay a pretty penny for the US’s leading AI models when Chinese ones are far cheaper?
Major companies like DoorDash, Airbnb, and Siemens are adopting Chinese AI tools, the Financial Times reports, attracted not only by their lower costs but their “open-weight” approach that allows them to be molded to each company’s particular needs.
According to data from OpenRouter, a platform that provides all-in-one access to major AI models and tracks their usage, leading Chinese models from DeepSeek and Z.ai have overtaken US equivalents like Anthropic’s Claude and OpenAI’s ChatGPT. Cost-cutting, it seems, trumps all geopolitical rivalries.
Chinese models are “the elephant in the room,” Eugene Cheah, CEO of the AI platform Featherless AI, told the FT. “Enterprises are starting to realize, ‘Hey, we don’t need the best model, we can use the faster, cheaper models.’”
US-based AI models have frequently been seen as the most advanced, but that perception is shifting. The release of GLM-5.2 from the Chinese startup Z.ai last month caused a stir in Western tech circles, as major Silicon Valley figures hailed it as capable or nearly as capable as US systems despite being significantly cheaper to use.
Even companies such as Coinbase are using Chinese models, and, yes, even Microsoft is trialing China’s DeepSeek AI model for some of its work.
Earlier this month, DoorDash cofounder Andy Fang said the company was saving a lot of money by having “lower-level work” performed by a model from the Chinese startup Moonshot AI.
“Enterprises have an incentive to shift some of their workload to cheaper models. Why would you pay a premium for Anthropic, OpenAI models when for a lot of the workloads you need, the Chinese models are generally workable?,” Sam Bresnick, a research fellow at Georgetown University’s Center for Security and Emerging Technology, told the FT.
CNBC highlighted how these companies are burning through their token usage, precipitating the shift towards Chinese AI models.
“The share of tokens used by U.S. companies on Chinese AI models via OpenRouter — a platform that enables developers to access a range of AI models — has sat above 30% each week since Feb. 8, with that figure rising as high at 46%. The average across the previous 12 months was just 11%, falling to 4.5% in the first half of 2025.”
Patrick Zhou, a former tech lead at Meta and Google, provided some more insights in a video report titled “Why AI is Collapsing: How China is Winning.” He points out that while it can be argued that the American models are relatively better overall, the question has become whether companies need the upscale models, or are the cheaper and open-source models from China sufficient enough to do the bulk of the work. He notes that some of the Chinese models are ten times cheaper than Anthropic’s Claude model.
Zhou also commented on remarks from Palantir CEO Alex Karp, who rebuked these AI companies on CNBC for their token-based economic model. “I’m not throwing shade at them, but something has gone completely wrong. The basic view among enterprises in this country is I’m going to chillax and waste my time with tokens.”
“Who owns the data? Where is it being cached? Are the prompts secure? Is this being transferred to you? If it was so valuable, let’s say I can make you a billion dollars tomorrow, wouldn’t I say, ‘I’ll make a billion dollars and I want 30%?’ Why are they charging for tokens if it is so valuable?!"
Zhou also highlighted in his vlog that Microsoft is indirectly saying something similar, warning that these AI firms are gobbling up data and then reselling it, whereas Microsoft is beginning to pivot towards AI models where the customer is still in control of their data and not the company. This is another reason why the Chinese models are being favored in this regard.
Meanwhile, the tech sector is once again coming under stress at the moment. In recent days, IBM and Intel stock dropped precipitously.
In the case of IBM, their shares dropped identically to the infamous Dot.Com Bust.
The day following the initial drop, Trends Journal contributor and stock market analyst Gregory Mannarino said, “IBM shares plummeted 25.2%, marking the largest single-day loss in the company’s history. The crash erased approximately $67 billion to $70 billion in market value.”
This drop-off in Intel and especially IBM is important to note because these two tech firms are two corporations President Donald Trump and his administration took a direct stake in; something the administration has tried to say is not socialism, despite the fact that what they are doing is by definition socialism.
The White House lauded in May the massive gains Intel has made since making the 10% stake deal in August of last year. Those gains, at the moment, are being erased; especially IBM, which announced the partnership in May of this year.
AUTHOR COMMENTARY
Proverbs 28:11 The rich man is wise in his own conceit; but the poor that hath understanding searcheth him out.
As Alex Karp said in his interview, “The jig is up.”
You don’t have to like Karp, I certainly don’t (who does?), but Karp, and Microsoft, have exposed holes in the shell game that is being played.
We hear talk of how we are in this “AI race” and we can’t let China win. Yet here we are, and American companies across multiple sectors are now looking to cut costs by using Chinese models. The race is over, the war has been lost. The jig is up.
Back in December 2025 and February of this year, I documented that these AI firms and startups are unprofitable.
The Economist said in its predictions for 2026 that the bubble could very well burst. It cited a viral study published in July from the Massachusetts Institute of Technology (MIT) “uncovers a surprising result in that 95% of organizations are getting zero return. The outcomes are so starkly divided across both buyers (enterprises, mid-market, SMBs) and builders (startups, vendors, consultancies) that we call it the GenAI Divide. Just 5% of integrated AI pilots are extracting millions in value, while the vast majority remain stuck with no measurable P&L impact.”
Now we find out that American companies, even Microsoft, are quietly offloading work to Chinese models. The Ponzi is falling apart.
This is why I have warned, as have many others, that we are facing a serious AI Bubble that could pop in the near-future; and it appears that that bubble is coming under great stress.
Proverbs 28:22 He that hasteth to be rich hath an evil eye, and considereth not that poverty shall come upon him.
As for these tech stocks — this is why a government cannot get involved with corporations at this level. This IS socialism, this is fascism, this is what the World Economic Forum is calling Stakeholder Capitalism.
And now you better understand why there is talk from both sides — the Trump administration, MAGA, and Democrats — about socializing AI startups such as OpenAI and taking stake in that company and others like it:
They privatize the gains and socialize the losses. They get to pocket the benefits from the pumped-up valuations in the stock markets that they insider trade on, and keep suspended because of suppressed interest rates, while passing on the debt and losses to the public.
This is another reason why Trump is so adamant about keeping interest rates low: because the stock market, especially the tech sector, loves low to near-zero rates; and cheap liquidity will keep the Ponzi going a bit longer, which is why I still believe the new Fed Chair Kevin Warsh will start cutting rates later this year.
Proverbs 22:16 He that oppresseth the poor to increase his riches, and he that giveth to the rich, shall surely come to want.
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Both IBM & Intel were already scorched before PEDU$☆ became involved. Maybe he/it can help them with bankruptcy proceedings.
MAGA, MAGA, push made in Merica, we are winning, we are #1 and we use cheaper China A.I. to get work done cause Chinera is cheaper. So next time someone cries about; why are ya using China crap products instead of Merica ones, tell um to pound sand, cause all major companies do the same thing. The US government caused this mess years ago by letting them move their factories overseas; and know it's bitting them in the ass(pardon for this word) What a crappin joke!!
Take the A.I. and shove it, it's nothing but Evil wicked slop from the father of lies:
Joh 8:44 Ye are of your father the devil, and the lusts of your father ye will do. He was a murderer from the beginning, and abode not in the truth, because there is no truth in him. When he speaketh a lie, he speaketh of his own: for he is a liar, and the father of it.