The U.S. opens a new front in the AI war

NQ100

Key zone: 28,500 -29,500

Buy: 29,700 (on strong positive fundamentals); target 31,500-32,500; StopLoss 29,000

Sell: 28,500 (on a pullback following a retest of 29,000); target 27,000-26,500; StopLoss 29,200

The technological rivalry between the United States and China is entering a new phase. Trump is prepared to impose sanctions on Chinese AI developers if an investigation confirms that American intellectual property was used in the development of Chinese large language models.

Over the past several years, Washington has restricted China's access to advanced semiconductors, semiconductor manufacturing equipment, and Nvidia accelerators. Now, however, the pressure may extend directly to the AI models themselves. For the global technology sector, this marks the transition to a new stage of strategic competition.

To recap:

Distillation is an AI training method in which a smaller and more efficient model is created on the basis of an existing, more sophisticated architecture. Last month, Anthropic submitted a formal statement to the U.S. Senate, alleging what it described as the largest suspected case of intellectual property theft by Chinese developers.

The allegations focused on Moonshot AI, the company behind the Kimi K3 language model. According to the U.S. side, its development may have involved the covert distillation of Anthropic and OpenAI models. At the same time, Kimi K3 is more expensive than most Chinese alternatives, yet still costs roughly half as much as Claude Opus and GPT-5.5.

This is no longer merely a commercial dispute between companies. In practice, a new architecture of the global AI market is emerging, in which export restrictions may apply not only to hardware but also to the algorithms themselves.

Until now, the U.S. strategy has been centered on limiting China's computing capabilities. Export bans on Nvidia accelerators, restrictions on ASML equipment exports, and sanctions against semiconductor manufacturers were intended to slow the development of Chinese AI.

However, this policy has failed to achieve the expected results.

Following the emergence of DeepSeek, it became evident that competitive language models could be developed at significantly lower costs than their American counterparts. Washington is now attempting to establish a new level of export control that would apply not to physical technologies, but to the output of leading AI laboratories.

The proposed restrictive measures include:

• prohibiting U.S. companies from cooperating with Chinese AI developers;
• restricting Chinese companies' access to American cloud platforms;
• banning software licensing;
• imposing restrictions on U.S. investors involved with China's AI sector;
• expanding export controls to cover software technologies.

Such a scenario would mark the beginning of a new stage in the technological fragmentation of the global economy. Two independent ecosystems are gradually taking shape.

• The American ecosystem: OpenAI, Anthropic, Google, Microsoft, Nvidia, and leading Western cloud infrastructure providers.
• The Chinese ecosystem: Alibaba, Tencent, Baidu, Huawei, Moonshot AI, and other domestic developers.

Each new package of restrictions accelerates this process. If sanctions genuinely limit the development of Chinese AI companies, the potential market for equipment could also shrink. This would result in higher long-term costs, reduced efficiency of global competition, and a higher geopolitical risk premium across the entire technology sector.

What does this mean in practice?

For traders, it represents the emergence of a new long-term structural market driver.

In the short term, higher volatility among technology companies should be expected. Shares of companies associated with AI, semiconductors, cloud infrastructure, and data centers remain the most sensitive.

Particular attention should be paid to the performance of the Nasdaq 100, as well as the shares of Nvidia, AMD, Broadcom, Microsoft, Alphabet, and China's largest technology companies.

The medium-term outlook is considerably more far-reaching.

If sanctions continue to expand, investors will have to incorporate a new permanent risk factor into the valuation of technology companies. Under such conditions, the key criterion will no longer be solely the pace of artificial intelligence development, but also the ability of each of the two technological ecosystems to evolve independently without access to the competing side's technologies.

So we act wisely and avoid unnecessary risks.

Profits to y’all!