China’s AI balancing act — beating the U.S. but keeping the tech from threatening Beijing’s rule
China is looking to challenge the U.S. in artificial intelligence. China’s tech giants have launched their own AI models.
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China’s race to develop smarter-than-human artificial intelligence may put it ahead of the U.S., but such ground-breaking technology could also risk lessening the stronghold that the ruling Communist Party has over the world’s second-largest economy.
That’s the view of prominent AI scientist Max Tegmark, who told CNBC artificial general intelligence (AGI) is closer than we think and the narrative of a geopolitical battle between the U.S. and China racing to build the smartest AI is a “suicide race.”
While there is no singular definition of AGI, it is broadly taken to refer to AI that can outsmart humans.
Applications like ChatGPT — that allow users to prompt a chatbot for answers — have exploded in popularity. But many AI companies are racing to develop the next level, with AI that has human-level intelligence.
Sam Altman, the CEO of OpenAI, has said that AGI could be achieved by 2025. While there are other major names in the tech sector who also think AGI is close, many others think true AGI is still very far away.
As well as competition between technology companies, there is also the geopolitical battle taking place between the U.S. and China for dominance in realms from AI to chips. While this is often portrayed as a race to be first to the latest technology, Tegmark said this is not the right framing.
“I think of this battle, this geopolitical battle to build AGI first as a ‘hopium war’,” Tegmark told CNBC in an interview last month. ” I call it the ‘hopium war’ because it’s fueled by … delusional hope that we can control AGI.”
Tegmark is the president of the Future of Life Institute, a thinktank which penned a letter last year calling for AI labs to pause the development of advanced AI systems. The letter was signed by major tech names including Tesla CEO Elon Musk. Tegmark’s concern is that AI is advancing rapidly with very few guardrails in place, and no way to control it should it begin to outsmart humans.
“We are much closer to building AGI than figuring out how to control it. And that means that the AGI race is not an arms race, it’s a suicide race,” Tegmark said.
Is China worried about AGI?
China has little incentive to build AGI, according to Tegmark. The AI scientist recalled a story in which Elon Musk told him about a “high level meeting” the Tesla boss had with Chinese government officials in early 2023. Musk said to the Chinese government that if AGI is built, China “will not be controlled by the Communist Party, but by the super intelligence,” Tegmark said.
“[Musk] got a very strong reaction. Some of them, really hadn’t thought about that, and with less than a month from that, China came out with their first AI regulations,” Tegmark said, referencing new regulation governing generative AI.
China’s ministry of foreign affairs was not immediately available for comment on the anecdote. CNBC also contacted Tesla for a response from Musk.
“The U.S. doesn’t need to convince China to not build AGI. Even if the U.S. didn’t exist, the Chinese government would have an incentive to not build it because they want to be in control,” Tegmark said.
“[The] last thing they want is to lose that control.”
China’s approach to AI
AI is a strategic priority for the Chinese government. The country’s biggest firms such as Alibaba, Huawei and Tencent have been developing their own AI models. The capabilities of those models are also advancing.
China was also among the first countries in the world to bring in regulation around various aspects of AI. The country’s internet is heavily censored and any information that appears to go against Beijing’s ideology is blocked. OpenAI’s ChatGPT is banned and it is well-noted that chatbots in China won’t answer questions related to politics and topics deemed sensitive by the Communist Party.
The country’s approach to AI is therefore an attempt to push innovation while also balancing its own interests. When it comes to AGI, China is likely to pursue a similar approach, according to analysts.
“I would not count on China to limit its own AI capabilities due to fears that such technologies would threaten Party rule. Similar predictions were made about the internet, they all proved to be false,” Kendra Schaefer, a partner at consultancy Trivium China,” told CNBC.
“China will attempt to dominate AGI while creating a techno-regulatory apparatus that limits what AGI is permitted to do domestically.”
U.S.-China AI battle
Despite Tegmark’s view that the the race to build AGI is a “hopium war,” geopoltiics remains front and center between the U.S. and China when it comes to development of the technology.
“Right now, China is viewing AI through a dual-lens: geopolitical power and domestic growth,” said Abishur Prakash, founder and geopolitical strategist at Toronto-based strategy advisory firm, The Geopolitical Business.
“With AI, China hopes to shift the balance of power around the globe, like creating a new export model. And, in parallel, China wants to power its economy in new ways, from government efficiency to business applications,” Prakash told CNBC.
The U.S. has pursued a policy of attempting to restrict China’s access to key technologies, mainly semiconductors like those designed by Nvidia, that are required to train more advanced AI models. China has responded by attempting to build its homegrown chip industry.
Will the U.S. and China partner on AI rules?
Technologists have warned of some of the risks and dangers when AGI does finally arrive. One theory is that without guardrails, AI will be able to improve itself and design new systems independently.
Tegmark believes that any such risks will be realized by both the U.S. and China, which will force both countries’ governments to individually come up with rules around AI safety.
“So my optimistic path forward is the U.S. and China unilaterally impose national safety standards to prevent their own companies from doing harm and building uncontrollable AGI, not to appease the rivals superpowers, but just to protect themselves,” Tegmark said.
“After that happens though, there’s this really interesting stage where the U.S. and China will be like, wait, how can we guarantee that North Korea doesn’t build AGI or someone else? And then the U.S. and China have an incentive now to push the rest of the world to join them into an AGI moratorium.”
Indeed, governments are already trying to work together to figure out how to create regulations and frameworks around AI. Last year, the U.K. hosted an AI safety summit, which the U.S. and China were both in attendance, to discuss potential guardrails around the technology.
But regulation and rules around AI are currently fragmented. This year, the European Union enacted the AI Act, the first major law globally governing the technology. China has its own set of rules, while many other countries have not yet moved to create any regulation.
Tegmark’s hope of co-ordination around AI safety is echoed by others.
“When the dangers of competition are greater than the rewards, nations will ideally be motivated to come together and mutually self-regulate,” Trivium China’s Schaefer said.
“Indeed, some Chinese policymakers have advocated for getting out ahead of that potential issue and establishing an international governance body under the UN – similar to the International Atomic Energy Agency – so there is desire on Beijing’s side to establish a global governance body,” she said.
Teladoc Health Inc. signage on the floor of the New York Stock Exchange on Dec. 31, 2024.
Michael Nagle | Bloomberg | Getty Images
Teladoc Health shares fell in extended trading on Wednesday after the company reported a wider loss than analysts expected and issued disappointing quarterly guidance.
Here’s how the company did, compared to analysts’ consensus estimates from LSEG:
- Loss per share: 28 cents vs. 24 cents expected
- Revenue: $640.5 million vs. $639.6 million expected
Revenue at the telehealth company decreased 3% in the fourth quarter from $660.5 million during the same period last year, according to a release. Teladoc’s net loss widened to $48.4 million, or 28 cents per share, from a loss of $28.9 million, or 17 cents per share, a year ago.
Teladoc is in the middle of a deep slump, with its stock price dropping in each of the past four years due to hefty competition in remote health, challenges at mental health division BetterHelp and high operating costs.
When Teladoc acquired digital health company Livongo in 2020, the companies had a combined enterprise value of $37 billion. Teladoc’s market cap was around $1.9 billion as of market close on Wednesday.
“As we look forward in 2025, execution will continue to be a top priority as we advance efforts to unlock growth opportunities and position the company for long term success,” Teladoc CEO Chuck Divita said in the statement. “We will also remain focused on our cost structure, building on the significant improvements achieved in 2024 over the prior year.”
Teladoc reported adjusted earnings of $74.8 million in its fourth quarter, a 35% decrease from a year ago. Adjusted earnings for the company’s Integrated Care segment declined 5% to $53.2 million, and BetterHelp saw adjusted earnings drop 63% to $21.7 million.
For the first quarter, Teladoc said it expects revenue of between $608 million and $629 million, while analysts were expecting $632.9 million. The company said adjusted earnings will be between $47 million and $59 million for the period.
Earlier this month, Teladoc announced it will acquire preventative care company Catapult Health in an all-cash deal for $65 million. Teladoc said its outlook includes the anticipated contribution from the deal but not the effect of potential impairments or purchase accounting. Teladoc said the acquisition should close at the end of the month.
Teladoc will host its quarterly call with investors at 4:30 p.m. ET.
— CNBC’s Bertha Coombs contributed to this report.
Salesforce CEO Marc Benioff appears at the World Economic Forum in Davos, Switzerland, on Jan. 23, 2025.
Halil Sagirkaya | Anadolu | Getty Images
Salesforce reported weaker-than-expected quarterly revenue on Wednesday and issued a forecast that fell short of analysts’ estimates. The stock price slipped 4% in extended trading.
Here’s how the company did compared with LSEG consensus:
- Earnings per share: $2.78 adjusted vs. $2.61 expected
- Revenue: $9.99 billion vs. $10.04 billion expected
Revenue increased 7.6% from a year ago in the quarter that ended Jan. 31, according to a statement. Net income rose to $1.71 billion, or $1.75 per share, from $1.45 billion, or $1.47 per share, a year earlier.
The top category of subscription and support revenue was service, at $2.33 billion. The figure was up about 8% and below the $2.37 billion consensus among analysts surveyed by Visible Alpha. In the sales category, Salesforce generated $2.13 billion in revenue, up 8% and also trailing Visible Alpha’s consensus of $2.17 billion.
During the quarter, the company introduced its second-generation Agentforce artificial intelligence agent technology, which answers employee questions in the Slack team communications app.
Salesforce said it has completed more than 3,000 paid deals involving Agentforce since October. Agentforce has gotten involved in 380,000 conversations through Salesforce’s help website, with humans getting involved in 2% of cases, according to the statement.
“A lot of other vendors are talking about their agent capabilities, but few are able to show that they’ve got this really running at scale,” co-founder and CEO Marc Benioff said on a conference call with analysts.
Agentforce will make a modest contribution to revenue in fiscal 2026, with a larger effect in the following year, said Amy Weaver, Salesforce’s outgoing finance chief.
Benioff referred to a forthcoming product in the area of information technology service management, where ServiceNow operates.
The U.S. Department of Government Efficiency is using Slack, Benioff said.
“We’ll work closely with the government,” he said. “We’ll do anything we can to help them succeed.”
The company called for $2.53 to $2.55 in adjusted earnings per share for the fiscal first quarter, with $9.71 billion to $9.76 billion in revenue. Analysts polled by LSEG had anticipated adjusted earnings of $2.61 per share, with $9.9 billion in revenue.
For fiscal 2026, Salesforce is targeting $11.09 to $11.17 in adjusted earnings per share on $40.5 billion to $40.9 billion in revenue, implying 7.4% growth. The LSEG consensus was for adjusted earnings per share of $11.18 on $41.35 billion in revenue.
As of Wednesday’s close, Salesforce shares are down about 8% so far in 2025, while the S&P 500 index has gained about 1%.
Technology
Instacart suffers steepest drop on record after disappointing revenue, lackluster forecast
The Instacart logo is seen on a smartphone and on a PC screen.
Pavlo Gonchar | SOPA Images | Lightrocket | Getty Images
Instacart‘s stock had its worst day on record, slumping 12% after the grocery delivery company posted a fourth-quarter revenue miss and offered light guidance for the current period.
Prior to Wednesday’s move, the stock’s biggest one-day slump came in November, when it dropped 11%.
Instacart reported fourth-quarter revenue of $883 million, falling short of the $891 million average analyst estimate, according to LSEG. The company said it anticipates adjusted earnings of between $220 million and $230 million for the first quarter, below a consensus forecast of $237.1 million.
Gross transaction value, which measures the value of products sold, will come in between $9 billion and $9.15 billion in the quarter, compared to a FactSet estimate of $9 billion. Instacart said it expects average order growth to decline due to restaurant orders and its $0 delivery fee on minimum $10 baskets.
When Instacart held its Nasdaq debut in September 2023, it became the first notable venture-backed company to go public in the U.S. in about two years, as the market adjusted to soaring inflation and rising interest rates.
The company, whose official corporate name is Maplebear, closed its first day on the market with a roughly $11 billion market cap, down from its $39 billion private market valuation in 2021 during the Covid-19 pandemic.
The stock peaked at $53.15 on Feb. 19 after rallying 76% last year. It closed on Wednesday at $42.80.
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