Gary Gensler warns US AI firms face challenges from Chinese models

Gary Gensler, the former SEC chair who spent years as the crypto industry’s most polarizing regulator, has turned his attention to a different kind of market disruption. In a Bloomberg Radio interview, Gensler warned that Chinese AI models are creating serious headwinds for American AI companies, both on the competitive front and on the question of whether hundreds of billions in spending will ever pay off. Gensler, now a professor at MIT, called the situation a “big, consequential wrinkle.” The wrinkle, in plain terms: US firms are trying to build AI responsibly while Chinese competitors are scaling fast, playing by different rules, and rapidly eating into global market share. The numbers behind the anxiety The scale of US investment in AI infrastructure is staggering. Capital expenditures related to AI are projected to surpass $795 billion in 2026, with estimates suggesting that figure could blow past $1 trillion in 2027. The competitive shift has been breathtakingly fast. Chinese open-weight AI models, developed by companies including DeepSeek, Alibaba, Moonshot AI, and MiniMax, accounted for roughly 1% of global AI workloads in late 2024. By the end of 2025, that share had surg...