Chinese AI labs have released three models over the past two months that are nearly as powerful as America’s frontier systems and radically less expensive, challenging investor expectations that top U.S. labs will become highly profitable. Capital markets have valued Anthropic and OpenAI at nearly $1 trillion each, while critics such as Sen. Bernie Sanders have called for nationalizing top AI labs over fears that automation could transfer wealth from workers to tech companies. In June, Beijing’s Z.ai debuted a model that performed nearly as well as Claude and ChatGPT’s second-tier systems on independent benchmarks. Weeks later, another Chinese firm, Moonshot, unveiled “Kimi,” and a third model was also released. These advances suggest the AI industry may be more competitive than investors expected, potentially making frontier AI a low-margin business. A world of cheap, open-source AI would bring both promise and danger.