Chinese AI startup Moonshot shakes US chip stocks with open-weight Kimi K3 model
Earlier this month, a lesser-known Chinese AI startup named Moonshot AI launched its Kimi K3 model, which surprisingly matched the performance of top-tier models from Anthropic and OpenAI. This news led to a drop in U.S. chip stocks and pushed them into bear market territory. It’s reminiscent of the DeepSeek incident from 2025 when another Chinese lab introduced an affordable yet effective model. While analysts cautioned that Kimi’s size demands considerable computing power, it underscores the volatility in the AI sector. Currently, around one-third of global AI usage relies on Chinese open-source models, which are significantly cheaper in countries like Nigeria and Brazil. Additionally, the Trump administration is contemplating a ban on Chinese models due to security concerns.
Key facts
- Moonshot AI released open-weight model Kimi K3 earlier this month.
- Kimi K3 matched performance of premium models from Anthropic and OpenAI.
- U.S. chip stocks slid into a bear market following the release.
- This echoes the DeepSeek moment in 2025 when another Chinese lab released a cheaper model.
- Analysts later noted Kimi's size still requires significant compute.
- Xi Jinping treats open-source AI as a national strategy.
- Z.ai's GLM 5.2 and Alibaba's Qwen3.8 Max are also open-weight.
- Roughly a third of global AI usage runs on Chinese open-source models.
- Costs in Nigeria, Malaysia, and Brazil are over 90% lower than OpenAI.
- Trump administration has considered banning Chinese models on national security grounds.
- Running costs for open-source models have fallen 50 times in three years.
- Performance gap with closed models is down to about 3%.
- Most labs still lose money; industry faces a race to the bottom.
Entities
Institutions
- Moonshot AI
- Anthropic
- OpenAI
- Meta
- Z.ai
- Alibaba
- Mozilla
- Quartz
Locations
- China
- United States
- Nigeria
- Malaysia
- Brazil
Sources
- Quartz —