Chinese AI Startup Moonshot Reaches $3 Billion Valuation

Chinese generative AI startup Moonshot has reportedly raised $300 million in a new funding round.

The round, which included participation by Tencent Holdings, lifted Moonshot’s valuation to $3.3 billion, Bloomberg News reported Monday (Aug. 5), citing sources familiar with the matter.

The report notes that the investments mark a surge in new deals for Chinese artificial intelligence companies hoping to eventually create their country’s answer to OpenAI’s ChatGPT. Earlier this year, Tencent rival Alibaba led a record $1 billion funding round for Moonshot, while both companies more recently invested in AI firm Baichuan, which is valued at $2.8 billion.

Meanwhile, China is leading the U.S. in the AI race, at least in some respects. A study by AI and analytics software company SAS and Coleman Parkes Research showed that 83% of Chinese respondents in a range of industries use generative AI, compared to just 65% of Americans and a global average of 54%.

And a recent report by the United Nations’ World Intellectual Property Organization showed that China is also ahead of the U.S. in generative AI patents, filing more than 38,000 patents between 2014 and 2023, compared to 6,276 filed by the United States in the same timeframe. As PYMNTS wrote last month, China’s regulatory landscape has played a crucial role.

“China’s approach to regulation has not surprisingly taken a China-first approach,” Nicholas Rioux, CTO of Labviva, an AI procurement technology company for life sciences, told PYMNTS. “Regulations are being implemented to ensure local market dominance within the Chinese market for local firms. This gives local companies, aligned with regulators, an unfair advantage over foreign and less aligned local competitors.”

Meanwhile, American tech giants’ AI efforts have begun getting a largely negative reaction from Wall Street, with Amazon, Google and Microsoft all seeing their share prices drop in the wake of their most recent earnings report, Bloomberg reported last week.

That report argued these companies have failed to demonstrate that their AI infrastructure investments were translating into sales.

One exception: Meta, whose second-quarter revenue surpassed expectations, with CEO Mark Zuckerberg saying that the company’s investment in AI has led to better ad targeting and content recommendations.

Zuckerberg also predicted that AI would one day generate personalized ads, letting advertisers specify business objectives and budgets, with Meta’s AI doing the rest.

“Advertisers will basically just be able to tell us a business objective and a budget, and we’re going to go do the rest for them,” he said. “We’re going to get there incrementally over time, but I think this is going to be a very big deal.”