What’s up: China is eroding America's AI lead; salaries are rising for AI researchers; Senate strips Trump tax bill provision aimed at blocking state AI regulation.

Good morning. Many AI-agent developers are set on conquering the U.S. market. Not Wonderful, the Tel Aviv startup that just raised $34 million in a seed round led by Index Ventures.

Wonderful's play is to target the rest of the world: building customer-support agents for businesses that deal in Hebrew, Arabic, Czech, French, Greek, Dutch, Italian and other languages, WSJ's Yuliya Chernova reports.

The agents interact using voice, chat and email, and help businesses serve their customers in a variety of ways, from helping with insurance claims to fixing internet connectivity issues. The company is also making agents customizable, providing tools to enterprises so they could test and adjust the agents before and during deployment.

“We believe countries are verticals on their own,” said Bar Winkler, chief executive and co-founder of Wonderful. “They have a unique language, unique culture, and there’s nuance to operating there.”

Read the full story.

China is quickly eroding America's lead in the global AI arms race. Chinese artificial-intelligence companies are loosening the U.S.’s global stranglehold on AI, challenging American superiority and setting the stage for a global arms race in the technology, The Wall Street Journal reports. In Europe, the Middle East, Africa and Asia, users ranging from multinational banks to public universities are turning to large language models from Chinese companies such as startup DeepSeek and e-commerce giant Alibaba as alternatives to American offerings such as ChatGPT.

DeepSeek on the rise. HSBC and Standard Chartered have begun testing DeepSeek’s models internally, according to people familiar with the matter. Saudi Aramco, the world’s largest oil company, recently installed DeepSeek in its main data center. American cloud service providers such as Amazon Web Services, Microsoft and Google offer DeepSeek to customers, despite the White House banning use of the company’s app on some government devices over data-security concerns.

Tech stocks fall, led by Tesla, and the market slips from all-time high. Megacap companies including Tesla and Nvidia drove the tech-heavy Nasdaq Composite lower, with Tesla dropping more than 5% after the feud between Elon Musk and President Trump spilled back into public view, WSJ reports.

Analysts still believe tech stocks will have a very strong second half of the year with the AI revolution tailwinds now accelerating, WSJ reports. That’s across semis, software and the enterprise and consumer landscape, Wedbush analysts say in a research note. “Tech stocks are poised to see another 10%+ move higher in the second half of 2025 led by tech winners in this ‘golden age’ for the tech world,” the analysts add.

Figma officially files for IPO. The design software company filed on Tuesday and plans to trade on the New York Stock Exchange under ticker symbol FIG, CNBC reports. The offering would be one of the hotly anticipated IPOs in recent years given Figma’s growth rate and its high private-market valuation. The company, valued at $12.5 billion in a tender offer last year, said in April that it had confidentially filed for an IPO with the SEC.

Nordic Capital acquires healthcare analytics company Arcadia. The deal reflect’s Nordic’s bet on the power of AI to disrupt healthcare, WSJ reports. Arcadia works with insurers and other health organizations, enabling payers and providers to consolidate—and analyze—data from various sources, including electronic health records, billing and admissions, as well as patient discharges and transfers.

Grammarly signs deal to acquire AI email startup Superhuman. The deal follows Grammarly’s recent $1 billion funding as it aims to build out a broader AI productivity suite, Reuters reported. The companies didn't disclose terms of the financial transaction.

AI researcher Christopher Manning takes leave from Stanford for AIX Ventures. Manning, one of the most-cited researchers in the field of natural language processing and a former director of the Stanford AI Lab, has been with San Francisco-based AIX, in a part-time investing role since 2021, but will now devote himself more fully to investing and advising portfolio companies, WSJ reports. AIX has backed startups including HuggingFace, Weights & Biases, and Perplexity.

Salaries are rising for AI researchers. An ongoing talent war is pushing total compensation for top AI researchers up to $2 million, up from about $900,000 in 2022, the Financial Times reports. AI is also pushing salaries for corporate tech executives through the roof, WSJ’s Belle Lin reported earlier this week.

New York-based PE firm Recognize raises $1.7 billion for second tech-services fund. Recognize’s latest fundraising efforts benefited from a series of exits and a partial exit that the firm generated from its debut effort, including Applications Software Technology, or AST, an enterprise-planning software provider that the firm sold to IBM earlier this year, WSJ reports.

Senate votes to strip a Trump tax bill provision aimed at preventing states from regulating AI. The controversial provision, which the Senate voted against 99 to 1, would have barred states from passing AI regulations if they had received funding from a $500 million broadband program, Bloomberg reports.

Data-labeling company Surge AI, which aims to compete with Scale, reportedly seeks $1 billion capital raise. Surge is looking to capitalize on a customer exodus from Scale following its Meta investment, Reuters reports. This would be the firm’s first capital raise.

Anthropic revenue hits $4 billion as its competition with the “vibe-coding” app Cursor intensifies. Anysphere, the maker of Cursor, has also hired two leaders of Anthropic’s competing coding product, Claude Code, The Information reports. Anthropic’s revenue is up almost four times from the start of the year, according to people familiar with the finances.

Huawei has open-sourced two of its artificial intelligence models. It’s a move tech experts say will help the U.S.-blacklisted firm continue to build its AI ecosystem and expand overseas, CNBC reports. The moves are in line with other Chinese AI players that continue to push an open-source development strategy. Baidu also open-sourced its large language model series Ernie on Monday.

House Republicans are already lining up to oppose President Trump’s “big, beautiful bill,” with conservatives and centrists blasting the legislation just hours after Vice President JD Vance cast his tiebreaking vote on the Senate version. At the moment, the number of House Republicans vowing to oppose the Senate version is enough to block the bill’s passage. Only three House Republicans need to oppose the bill to sink it. (WSJ)

The U.S. has stopped the delivery of air-defense interceptors and other weapons intended for Ukraine and is using them instead to beef up Pentagon stocks, a Trump administration official and two congressional aides said Tuesday. The move to reflects the Trump administration’s slackening commitment to aiding Kyiv in its defense against Russia versus the need to focus more on the longer-term threats from China and, more immediately, military needs in the Middle East. (WSJ)

Paramount Global said it has agreed in principle to pay $16 million to settle a lawsuit with President Trump over a “60 Minutes” interview with former Vice President Kamala Harris, the company said Tuesday. The settlement, which doesn’t include an apology, comprises payments made to the president’s future presidential library and legal fees. (WSJ)

The WSJ CIO Journal Team is Steven Rosenbush, Isabelle Bousquette, and Belle Lin.

The editor, Tom Loftus, can be reached at thomas.loftus@wsj.com.