Moonshot AI’s Kimi K3 release sparks a sell-off in chip stocks, wiping billions in market value amid fears of reduced U.S. AI spending.
Moonshot AI unveiled Kimi K3, a 2.8-trillion-parameter open-weight model, triggering a broad decline in semiconductor and AI stocks. The VanEck Semiconductor ETF (SMH) fell below key support levels for the first time since April, extending losses to over 20% from its June peak.
The launch echoes January’s DeepSeek R1 release, which erased $590 billion from Nvidia’s market cap in a single session. Markets reacted similarly, with Taiwan’s benchmark down over 6% and Japan’s market closing 4% lower. The Nasdaq slid 1.5%, its worst performance of the week.
Full model weights for Kimi K3 will be publicly available by July 27. If independent testing validates its performance, U.S. AI firms may face increased pressure to justify infrastructure spending, potentially reshaping chip demand dynamics.