In 2025, Chinese artificial intelligence (AI) stocks cast a long shadow over the world’s equity markets. Ever since the first DeepSeek R1 model dropped in January, China has released one model after the other, some of them topping global leaderboards.
The success of China’s AI models and applications has caused considerable hand-wringing in Silicon Valley, where tech CEOs worry about having to compete with a leaner, meaner competitor. China has been able to train its AI models much more cheaply than Silicon Valley has been, avoiding the multiple hundred billion dollar price that the latter is paying. Many of Silicon Valley’s biggest tech companies are posting declining free cash flow (FCF) this year due to their AI capital expenditures (CAPEX). The big Chinese companies, however, are spending much less, using homegrown Chinese chips instead of pricey NVIDIA GPUs. This cost advantage has led to worries that China will eventually “disrupt” the likes of ChatGPT and Perplexity.
Whether that disruption will really happen or not is still to be determined. What’s certain is that some tech companies are better positioned to survive the “threat” of Chinese AI than others are. In this article, I will explore one Canadian tech stock that seems likely to survive the rise of Chinese AI unscathed.
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Shopify
Shopify (TSX:SHOP) is a Canadian tech company that is best known for an e-commerce shopping cart service. The service allows companies to host their own e-commerce websites and process payments. This model is highly distinct from that of Amazon as well as Chinese e-commerce companies like Alibaba (NYSE:BABA). Whereas those companies operate “one-stop-shop” websites, Shopify lets business owners build their own. This is a big selling point for certain types of companies, especially “prestige” brands that don’t want their products being sold alongside bargain-basement items. Shopify excels with this type of brand, which is not a great fit for Amazon or AliExpress.
AI at Shopify
The main reason why Shopify is still safe is that, despite the rise of Chinese AI, the company does not compete with Chinese AI. China’s big strides in AI have largely been in the domain of foundation models — i.e. the models that other companies use to develop their services. Shopify instead integrates AI into its core services. For example, it uses large language models to help vendors write sales copy and design creative for their products. It’s a natural extension of the company’s e-commerce service, with which it is well integrated. Most Chinese companies building AI do not have that advantage.
There is one Chinese AI company that does enjoy the same advantage Shopify does with AI: Alibaba. That company has rapidly become China’s AI leader, developing some of the country’s top models and integrating them into its e-commerce platform. Like Shopify, Alibaba uses AI to help businesses create advertising on autopilot. There is, therefore, some competition between Alibaba and Shopify in theory.
In practice, it’s a different story. Shopify and Alibaba target two very different customers. Shopify’s customers are generally branded companies that sell at relatively high price points; AliExpress is squarely in the “discount retail” category. These different target markets limit the head-to-head competition between Shopify and Alibaba, making the two companies more complementary than anything else. Indeed, Shopify vendors are known to use Alibaba to source products that they sell at a markup on their own sites. It’s a little-known partnership that has rewarded many e-commerce vendors over the years.
