US AI Lead Over China Narrows to Record Low as DeepSeek Advances, Bloomberg Intelligence Says

American AI companies' performance lead over China has narrowed to a record low, with top Chinese models trailing US rivals by just 3% on benchmark scores, according to Bloomberg Intelligence. The gap shrank from about 9% in May and 15% earlier this year following the September release of DeepSeek's V4.1 Flash, BI senior analyst Robert Lea wrote Monday, October 5, 2026. DeepSeek's V4.1 Flash scored 81.1 on LiveBench, ranking sixth globally and marking the highest placement for a Chinese model. Anthropic's top model scored 83.4. Lea attributed China's progress to deepening AI expertise and researchers' ability to optimize models for domestic hardware, raising doubts about the effectiveness of US export restrictions on Nvidia chips. Lea cautioned that rankings shift and monetization remains uncertain. He said China's AI industry may stay unprofitable until 2030, citing a brutal price war, low-margin token supply, and over 1,100 domestic large language models. ByteDance's Doubao leads in app monetization, while DeepSeek and Tencent chatbots remain free.