In the race for leadership in the global artificial intelligence (AI) market, a new model from a Chinese startup has shown the potential to unsettle American giants OpenAI and Anthropic. And it has managed to shake up the financial market.
On Friday, July 17th, Moonshot announced the launch of the Kimi K3 model, which, according to the company, rivals the main competitors in the sector. As a result, the Bloomberg Asia Pacific Semiconductors Index, an indicator that measures the performance of technology and chip companies in Asia, fell 6%.
In pre-market trading on Nasdaq, Alphabet (Google's parent company) shares were down 2%. Nvidia was down 2.7%. Intel was down 4%. On the NYSE, TSMC shares fell 3.5%, also in pre-market trading.
The Philadelphia Semiconductor Index, which tracks the leading US chip companies, fell 8.5% this week, its biggest drop in that period since "Liberation Day," Donald Trump's global tariff hike announced in April 2025.
Shares of Z.AI, a direct competitor of Moonshot, also plummeted, registering a 28.5% drop on the Hong Kong Stock Exchange, the biggest fall since its IPO in January. Minimax Group, another Chinese AI company, fell 16%.
The announcement of Moonshot occurred amidst President Xi Jinping's presence at the opening of the World Artificial Intelligence Conference (WAIC) in Shanghai. The moment was seen as a public demonstration of support for the country to become a global leader in AI.
In his speech, Jinping praised the country's advances in low-cost artificial intelligence and advocated for a broader global technological order. "AI development should not be the individual endeavor of a single country, but rather a symphony of international cooperation."
The revelation of the model rekindled, among global investors, fears of a new "DeepSeek moment," when the Chinese startup caused a huge global impact by making its artificial intelligence open source, which also caused companies' stocks to plummet, precisely because of reassessments about the need for such high investment volumes.
“There is concern that if American companies start using Chinese models more and Anthropic models less, Anthropic will invest less. This means that these American companies will reduce capital investments and, in the end, the demand for chips will be affected,” Vey-Sern Ling, managing director of the Swiss bank Union Bancaire Privee, told Bloomberg .
In any case, the market's interpretation was that the major companies managed to overcome the crisis caused by DeepSeek last year, as many of them continued with record investments in AI. The main fear was that the demand for chips could decrease, which did not happen.
“I wouldn’t say it’s a DeepSeek 2.0 moment, since this development didn’t come out of nowhere,” says Kevin Net, portfolio manager at the French firm Financière de L'Echiquier.
"This confirms that China is firmly in the AI race with the United States, especially when considering the cost-benefit ratio," he added.
In this sense, the launch of Moonshot demonstrates that the AI race in China has evolved into a competition based on much more than just price.
The startup priced its latest model at a similar value to the Anthropic Sonnet, a premium price compared to other Chinese models, considering its capabilities.
Moonshot also claimed to have outperformed Z.AI's most advanced offering in programming tasks. This fuels concerns that competition in China's AI sector is intensifying, just as the country's industry leaders are launching into global markets.
According to Moonshot, its new model has 2.8 trillion parameters and a window of 1 million tokens, indicators that show the size of its computing capacity.
The Artificial Analysis platform ranked the Kimi K3 ahead of Anthropic's Opus 4.8 in several high-end benchmarks, making it the first Chinese open-source model to achieve this milestone.
