Goldman Sachs has revised its outlook for the Chinese artificial intelligence sector, projecting that the market will reach $13 billion in annualized recurring revenue (ARR) by the end of the year. This represents a 30% increase from the firm's previous estimate of $10 billion. The investment bank attributes this growth to a combination of improved cost efficiency and significant technical advancements within the industry.

According to the research note released on Monday, the rapid development of AI models by domestic companies, specifically DeepSeek and MiniMax, has been a primary driver of this upward revision. Analysts point to the aggressive price-cutting strategies employed by these firms as a key factor in accelerating the adoption of AI services across the Chinese market. These price reductions, paired with ongoing breakthroughs in model capabilities, have created a more favorable environment for commercial integration than previously anticipated.

While the report highlights the competitive nature of the Chinese AI landscape, it emphasizes that the combination of lower costs and higher performance is effectively driving market expansion. The projection reflects a shift in how analysts view the commercial viability of domestic AI players, suggesting that the industry is moving toward a phase of wider enterprise and consumer adoption. The report does not explicitly detail the potential impact of international trade restrictions or regulatory hurdles on these specific revenue targets, focusing instead on the internal momentum of the domestic model market.