The race between the US and China in artificial intelligence is no longer just about building the most powerful models. Chinese AI companies have been releasing increasingly capable systems that are putting pressure on American rivals, forcing a wider debate over what will keep the US ahead.
Last year, Chinese AI lab DeepSeek created a massive $1 trillion sell-off in tech stocks after showing that China could build advanced AI models at a much lower cost. More recently, Moonshot AI’s Kimi K3 grabbed attention for its coding, reasoning, and knowledge work abilities, with many comparing it to models from OpenAI and Anthropic.
Speaking to CNN, Microsoft CEO Satya Nadella argued that while China is making strong progress, the US still has a major advantage that goes beyond the models themselves.
Nadella says trust gives the US an edge
When asked whether Chinese technologies such as Moonshot AI’s Kimi K3 have an advantage over American products because they are “much cheaper” and can already do what most companies need, Nadella disagreed. He said the US has built an ecosystem that continues to attract global users because of the trust it has earned over time.
“It’s been about trust in our technology, right? So, for example, if you take the Chinese models, guess where these models run? They run on a lot of the hyperscalers — that are American — all over the world,” Nadella told CNN.
He added that the open-weight nature of many Chinese AI models actually works in favour of US companies. Nadella further said that because the Chinese models are open weight, US companies can monitor, test, and post-train them.
America’s ecosystem is its biggest strength
According to Nadella, the US became a global technology leader not simply by building products, but by creating an ecosystem that other companies and countries could rely on.
“I think that one of the things that’s lost in this is the understanding even of how the US became competitive in the first place,” Nadella told CNN.
“We became competitive because we took our technology, we built a rich ecosystem where others could participate, in other countries, and trust our stewardship of this ecosystem,” he added. “And as long as that remains, we will absolutely be competitive, and we will win.” Microsoft is one of the biggest players in the US AI ecosystem and owns about a 27% stake in OpenAI’s for-profit public benefit corporation.