On July 16, Chinese company Moonshot AI unveiled a large-scale open model, Kimi K3, boasting 2.8 trillion parameters. This release triggered a powerful wave of sell-offs in the global semiconductor market, reminiscent in its effect of the January launch of DeepSeek R1.
On Friday, shares of leading chipmakers and companies related to artificial intelligence plummeted worldwide. The steepest declines were recorded in Asia: Taiwan's TWII index lost over 6%, and Japan's Nikkei 225 closed down 4%. In the US, the negative trend continued — the Nasdaq fell 1.5%, marking its worst performance in a week.
Shares of Chinese neural network developer Z.ai were particularly hard hit, crashing nearly 30% on the Hong Kong Stock Exchange. Nvidia temporarily ceded the title of the world's most valuable company to Apple, a clear indicator of investor nervousness.
Kimi K3 became the largest open model at the time of its launch. In the independent Artificial Analysis Intelligence Index ranking, it scored 57 points, surpassing the scores of Claude Opus 4.8 and GPT-5.5, and closely approaching Claude Fable 5 and GPT-5.6 Sol. Key point: in certain tests, Kimi K3 outperformed competitors at a significantly lower price. The model supports a context of 1 million tokens and works with text and images. Full weights will be released on July 27 under a Modified MIT license, opening access to the technology for smaller labs.
Wall Street analysts generally expected such a market reaction. Morgan Stanley described K3 as the result of steady progress, not a shock. According to expert Gary Yu, Chinese large language models (LLMs) are comprehensively catching up to US leaders in size, performance, and price. Bernstein called the release "confirmatory": AI is developing rapidly, and China is keeping pace, continuing to gain market share.
However, some experts consider the sell-off excessive. According to their data, the price of K3 is close to that of GPT-5.6, not radically lower. The downturn also affected cryptocurrencies: Bitcoin fell below $64,000.
It is worth noting that a broader sell-off in the chipmaker market has been ongoing for several weeks amid concerns over inflated valuations of companies tied to AI infrastructure. The Philadelphia Semiconductor industry index is more than 20% below its late-June record, formally indicating a "bear market." The VanEck Semiconductor fund — a barometer for the entire sector — broke through a key moving average for the first time since April in early July. The release of Kimi K3 only accelerated the decline.
Expert opinion from Cryptalist: The market once again demonstrates extreme sensitivity to any news capable of altering the competitive landscape in the AI field. The "DeepSeek effect" has turned into a persistent pattern: the emergence of a powerful and cheap Chinese model instantly revalues the entire semiconductor sector. Investors should brace for heightened volatility until the AI model race stabilizes and leaders are definitively determined.