AI race in 2025 is tighter than ever before

State of the industry report also shows that 2024 was a breakthrough year for small, sleek models to rival the behemoths

Top AI models’ performance is improving quickly, and the competition between them is growing ever fiercer.Credit: Adapted from Olivier Morin/AFP/Getty

The artificial intelligence (AI) race is heating up: the number and quality of high-performing Chinese AI models is rising to challenge the US lead, and the performance edge between top models is shrinking, according to an annual state of the industry report.

The report highlights that as AI continues to improve quickly, no one firm is pulling ahead. On the Chatbot Arena Leaderboard, which asks users to vote on the performance of various bots, the top-ranked model scored about 12% higher than the tenth-ranked model in early 2024, but only 5% higher in early 2025 (see ‘All together now’). “The frontier is increasingly competitive ― and increasingly crowded,” the report says.

The Artificial Intelligence Index Report 2025 was released today by the Institute for Human Centered AI at Stanford University in California.

The index shows that notable generative AI models are, on average, still getting bigger, by using more decision-making variables, more computing power and bigger training data sets. But developers are also proving that smaller, sleeker models are capable of great things. Thanks to better algorithms, a modern model can now match the performance that could be achieved by a model 100 times larger two years ago. “2024 was a breakthrough year for smaller AI models,” the index says.

Bart Selman, a computer scientist at Cornell University in Ithaca, New York, who was not involved in writing the Index report, says it’s good to see relatively small, cheap efforts such as China’s DeepSeek proving they can be competitive. “I’m predicting we’ll see some individual teams with five people, two people, that come up with some new algorithmic ideas that will shake things up,” he says. “Which is all good. We don’t want the world just to be run by some big companies.”

Neck and neck

The report shows that the vast majority of notable AI models are now developed by industry rather than academia: a reversal of the situation in the early 2000s, when neural nets and generative AI had not yet taken off. Industry produced fewer than 20% of notable AI models before 2006, but 60% of them in 2023 and nearly 90% in 2024, the report says.

The United States continues to be the top producer of notable models, releasing 40 in 2024, compared with China’s 15 and Europe’s 3. But plenty of other regions are joining the race, including the Middle East, Latin America and southeast Asia.

And the previous US lead in terms of model quality has disappeared, the report adds. China, which produces the most AI publications and patents, is now developing models that match their US competition in performance. In 2023, the leading Chinese models lagged behind the top US model by nearly 20 percentage points on the Massive Multitask Language Understanding test (MMLU), a common benchmark for large language models. However, as of the end of 2024, the US lead had shrunk to 0.3 percentage points.

“Around 2015, China put itself on the path to be a top player in AI, and they did it through investments in education,” says Selman. “We’re seeing that’s starting to pay off.”

The field has also seen a surprising surge in the number and performance of ‘open weight’ models such as DeepSeek and Facebook’s LLaMa. Users can freely view the parameters that these models learn during training and use to make predictions, although other details, such as the training code, might remain secret. Originally, closed systems, in which none of these factors are disclosed, were markedly superior, but the performance gap between top contenders in these categories narrowed to 8% in early 2024, and to just 1.7% in early 2025.

“It’s certainly good for anyone who can’t afford to build a model from scratch, which is a lot of little companies and academics,” says Ray Perrault, a computer scientist at SRI, a non-profit research institute in Menlo Park, California, and co-director of the report. OpenAI in San Francisco, California, which developed the chatbot ChatGPT, plans to release an open-weight model in the next few months.