In 2025, transformative advancements in artificial intelligence and substantial infrastructure investments dramatically altered the technological landscape.
CGTN’s Sally Ayhan engaged Ray Wang, Principal Analyst at Constellation Research, to delve into the year’s pivotal tech milestones and the competitive dynamics shaping the approach to 2026.
Throughout 2025, AI became an omnipresent force, infiltrating every facet of daily life. Generative AI achieved mainstream adoption while improvements in its capability to process text, images, audio, and video were noteworthy.
The transition from generative AI to Agentic AI enabled enterprises to automate workflows and enhance decision-making speed.
Progress in humanoid robotics boosted optimism in the West as the quest for Physical AI intensified, especially in response to declining birth rates amidst aging populations. Meanwhile, the cybersecurity sector experienced groundbreaking advancements to counter AI-driven threats.
Major technology firms invested billions in bolstering infrastructure—ranging from chips to power and data centers. This influx of capital reshaped the landscape for venture capital, private equity, and startup funding.
Notably, the unprecedented escalation in the data center sector surpassed commercial real estate, evolving into the predominant investment category. In 2025 alone, data centers accounted for over $61 billion in deal flow, with juggernauts like Amazon, Google, Microsoft, and Meta leading the charge, while emerging competitors like CoreWeave and Oracle fueled the frenzied growth.
Key Chinese firms, including Alibaba, Tencent, ByteDance, DeepSeek, and Zhipu AI, committed to investments near $70 billion in data center expansions for 2026.
The revelations of 2025 underscored the heightened value of natural resources and tangible assets, indicating that power, water, real estate, and critical minerals have become indispensable to any AI endeavor.
As fall descended upon 2025, investor skepticism regarding AI’s return on investment emerged following several months of exuberance. Reports surfaced indicating potential burnout or overexertion concerning AI, although these narratives quickly dissipated.
Firms that successfully integrated AI into their operations experienced substantial gains—ranging from tenfold to one hundredfold—in marked contrast to their less proactive counterparts.
Companies merely experimenting with AI found themselves trailing behind a newly emergent class of exponential AI leaders, thereby accentuating the market’s competitive divide. Ultimately, the AI arena remains characterized by long-term investment strategies in a winner-takes-all environment.
According to Constellation Research, the AI industry was valued at $150 billion, illustrating its integration into sectors such as smart cities, logistics, healthcare, pharmaceuticals, agriculture, robotics, and consumer chatbots within China.
The country’s efforts in adopting AI across tangible economic sectors have been significant. State funding exceeding $125 billion was channeled toward organizations like DeepSeek, Huawei, Alibaba, Tencent, and Zhipu AI, with platforms like Alibaba’s Tongyi and Qianwen making their mark during the rise of open-source large language models (LLMs).
AI robots, exemplified by entities like Agibot, showcased impressive advancements, yet they also underscored considerable limitations.
Huawei’s unveiling of the Ascend 910 chip and the progress of DeepSeek R1 and Wudao 3.0 in the realm of open-source LLMs further intensified the competitive landscape. The rivalry between China and the United States proved fierce, with the U.S. maintaining a slight edge.
As we prepare to enter 2026, rapid growth in AI agents and autonomous workflows appears imminent. Leadership will likely center on sectors such as chip superiority, anticipating advancements in speed and power efficiency, along with the expansion of tensor processing units (TPUs) for inference.
The contest between Chinese open-source models and their Western counterparts will hinge on the choices made by developers.
The impending struggle for data supremacy will escalate, with companies vying for access to datasets essential for feeding the relentless appetites of AI models and for the continuous refresh of signals.
The emergence of data incorporation companies and their innovative business models is expected to bear fruit by late 2026.
In this evolving narrative, tangible return on investment (ROI) will permeate every outcome-driven dialogue. The victors will likely realize dramatic efficiencies and boundless opportunities.
The competition rages on.
This clash is defined by widespread adoption and substantial investment. China currently leads in power efficiency and open-source LLMs, while the United States commands the model development, chip innovation, and market ecosystems.
The pivotal inquiry remains: which will establish the superior business model and which nation will incur the first fiscal setbacks due to AI investments—and, conversely, which will garner the most substantial returns? This is what lies ahead as we turn our gaze toward 2026.
What stood out most for you in 2025? What aspirations do you hold for 2026? We welcome your insights on our blog or reach out via email at R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org. Additionally, contact us if you require assistance with strategic endeavors.
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