- Moonshot AI launched Kimi K3 on Thursday, a 2.8-trillion-parameter open-weight model that ranked alongside Claude Fable 5 and GPT 5.6 Sol.
- Semiconductor stocks cratered Friday, with the VanEck Semiconductor ETF (SMH) falling below key support for the first time since April.
- Full model weights go public by July 27; if they hold up under independent testing, pressure on U.S. AI companies to justify infrastructure spending gets harder to dismiss.
Moonshot AI launched Kimi K3 in the dead of night Thursday, and markets woke up Friday doing what they always do when a Chinese lab closes the gap: they panicked. Semiconductor and AI stocks dropped across the board, with Taiwan’s benchmark falling more than 6% and Japan closing down 4%.
The Nasdaq slid 1.5% in its worst session of the week. The VanEck Semiconductor ETF (SMH) fell below its EMA support band for the first time since April, extending a rout that has put it more than 20% below its late-June record high.
The DeepSeek comparison seems well deserved. When DeepSeek dropped R1 in January 2025, the assumption that frontier AI required frontier spending cracked overnight. On the Artificial Analysis Intelligence Index, K3 scored 57, ranking above Claude Opus 4.8 and GPT-5.5, beating specific benchmarks at a fraction of the price.
Morgan Stanley analyst Gary Yu framed K3 as steady compound progress. “K3 has received positive feedback globally, signaling an all-round catch-up of Chinese LLMs with U.S. leaders in model size, performance, and pricing,” he wrote.
Bernstein analyst Robin Zhu called the release confirmatory evidence that AI state of the art evolves rapidly and China can keep pace. Full weights drop July 27 under a Modified MIT license, meaning small labs will have that model available for free.
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