Moonshot AI's Kimi K3 open-weight model sparked equity market selloff in semiconductor stocks, echoing DeepSeek's earlier impact on tech valuations.
Macro & Markets ·
Moonshot AI released Kimi K3, a 2.8-trillion-parameter open-weight model, which prompted a sharp selloff in semiconductor and AI equities on Friday. The VanEck Semiconductor ETF fell below key support levels for the first time since April, while Taiwan's benchmark dropped more than 6% and Japan closed down 4%. Full model weights are scheduled to become public by July 27 under a Modified MIT license, making the model freely available to smaller labs.
On independent performance benchmarks, K3 ranked alongside or exceeded several leading U.S. models, scoring 57 on the Artificial Analysis Intelligence Index and beating specific benchmarks of Claude Fable 5 and GPT-5.6 Sol at a fraction of the cost. Wall Street analysts, including those at Bernstein and Morgan Stanley, characterized the release as confirmation of a steady trend rather than a surprise—steady progress by Chinese AI labs in matching U.S. capabilities across model size, performance, and pricing.
The market reaction echoes the volatility triggered by DeepSeek's R1 release in January, when Nvidia lost roughly $590 billion in market cap in a single session. What remains unresolved is whether K3's performance will hold up under independent real-world testing once weights become available, and whether this will meaningfully reshape how markets evaluate infrastructure spending requirements for frontier AI development.