China's artificial intelligence models are seeing rapid adoption but are far from translating that into revenue commensurate with their valuations, according to a report from the Rhodium Group published Thursday.
All Chinese AI models combined generate approximately 10% of the revenue reported by OpenAI and Anthropic, the U.S.-based research firm estimated. The analysis uses annual recurring revenue — an industry metric calculated by multiplying a recent monthly figure by 12 — to compare the major players.
DeepSeek posted the lowest ARR among major Chinese AI firms at $500 million, followed by MiniMax at $800 million and Moonshot at $1 billion, the Rhodium report said. Z.ai reported $1.8 billion in ARR to investors on Wednesday, while ByteDance and Alibaba stood at $4 billion and $2.4 billion respectively. Even combined, those figures remain dwarfed by OpenAI's $40 billion and Anthropic's $65 billion.
The gap between revenue and investor valuations drew particular attention. Rhodium estimated valuation-to-revenue ratios of 50x for Moonshot and 163x for DeepSeek, both well above OpenAI's 34x and Anthropic's 21x.
"Valuations relative to revenue appear exorbitant for Moonshot and DeepSeek at present," the report said.
Chinese AI labs face structural challenges in monetizing their technology. Many of China's frontier models are open-source, allowing third parties to download and run the software independently — a model that limits developers' ability to capture revenue from users. Z.ai, for instance, is exploring ways to secure a larger cut from third-party providers offering access to its models.
U.S. models, by contrast, are predominantly closed. Leading AI models from OpenAI and Anthropic carry a far higher cost per task than their Chinese counterparts, according to AI-comparison firm Artificial Analysis.
Logan Wright, a partner at Rhodium Group who co-authored the report with research analyst Endeavour Tian, warned that the financing gap would make sustainable scaling difficult for Chinese frontier labs.
"They will be heavily dependent upon a favorable climate in the equity market — historically that's not an easy bet in China," Wright said. "Government funding has been helpful on the hardware side of the buildout of compute capacity, but similarly will probably balk at direct funding for the frontier labs."
Rhodium estimated that more than 60% of equity investment in Chinese AI chips and servers came from state-affiliated sources.
Z.ai raised its full-year ARR forecast on Wednesday to $3 billion from a prior $2.4 billion estimate, reflecting soaring usage from earlier lows this year. The company's Hong Kong-traded shares rose more than 5% on Thursday morning after tumbling to spring levels following news of a second major fundraise in two months — the stock had briefly more than tripled over the summer.
Rival MiniMax has similarly struggled to maintain gains above its IPO day price following a spring spike.
