Shares of major semiconductor and technology companies fell sharply on Wall Street following the launch of Kimi K3, a new artificial intelligence model from Chinese developer MoonShot AI.
The release has triggered a broad sell-off in the sector, with fund managers warning that the development could precipitate a more severe market correction than the one sparked by DeepSeek’s R1 model in January last year.
The market reaction reflects growing anxiety over the economics of the AI build-out.
Kimi K3 reportedly delivers performance comparable to leading US models but at a significantly lower cost structure.
This dynamic challenges the revenue assumptions underpinning the valuations of chipmakers and cloud infrastructure providers, who have benefited from the perception that only US firms could deliver top-tier AI capabilities at scale.
The sell-off comes amid a backdrop of heightened volatility for the sector.