In short
- Moonshot AI launched the Kimi K3 on Thursday — a 2.8-trillion-parameter open-weight model that sits alongside the Claude Fable 5 and GPT 5.6 Sol.
- Semiconductor stocks cratered on Friday, with the VanEck Semiconductor ETF (SMH) falling below key support for the first time since April.
- All weights will go public by July 27. If they continue to be subject to independent testing, the pressure on US AI companies to prove their infrastructure damage will be very hard to resist.
China did it too. Moonshot AI has been implemented Km K3 in the dead of night and the markets woke up today to do what they always do when the Chinese lab closes the gap: They are afraid.
Semiconductor and AI stocks fell on Friday. Taiwan’s benchmark fell more than 6%. Japan closed up 4%. The Nasdaq fell 1.5%, its worst session of the week.
The Comparison of DeepSeek it seems appropriate. When DeepSeek dropped R1 in January 2025, the idea that AI frontiers needed to destroy frontiers — and chips to match — was shattered overnight. Nvidia lost about $590 billion in market capitalization in one quarter. This time the damage spread throughout the area.
The VanEck Semiconductor ETF (SMH) broke below its EMA support group—a moving average that tracks price action in recent months—for the first time since April, extending a trend that has put it more than 20% below its late June record.
On the Artificial Analysis Intelligence Index—an independent indicator that combines performance in reasoning, cognition, math, and writing—K3 scored 57, which is above the Claude Opus 4.8 and GPT-5.5, according to the Claude Fable 5 and OpenAI’s GPT-5.6 in the benchmarks. All weights drop on July 27 under the Modified MIT license meaning that small labs will have the version for free.
Wall Street analysts in particular saw this coming. Bernstein’s Robin Zhu called the release “confirmation” — another data point in a year-long trend. Morgan Stanley analyst Gary Yu recorded K3 as a result of steady progress rather than surprise. “K3 has received positive reviews from around the world, indicating that Chinese LLMs are increasingly catching up with US leaders in model development, performance, and pricing,” he wrote.
Bernstein’s expert Robin Zhu also wrote this as an appeal. “At a higher level, K3 sees confirmation of our view that (1) AI (the state of technology) continues to evolve rapidly; and (2) China’s AI can continue to catch up with the world (the art), and share it over time.”
Moonshot is backed by Alibaba, which invested $1 billion in the company in 2024 at a cost of $2.5 billion. As of now it is about $31.5 billion.
Like Decrypt was closed in MayMoonshot already has deeper roots in US software development circles than many think—Cursor 2’s developer was found to be running on Kimi K2.5 without disclosure before the Cursor team accepted open source.
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