Moonshot AI's Kimi K3 Release Sparks Global Market Sell-Off

Chinese startup Moonshot AI released Kimi K3, a 2.8 trillion-parameter open-weight AI model that rivals the performance of flagship systems from OpenAI and Anthropic. The launch triggered a massive surge in user demand over a 48-hour period, forcing the company to temporarily pause new consumer subscriptions to maintain stability for existing members. Moonshot is now adding computing capacity and plans to introduce two membership tiers, including one specifically for coding workflows.

The release sparked global financial volatility as investors questioned the competitive moat of Western AI labs. Semiconductor and memory stocks—including Micron, AMD, Intel, and Arm—declined sharply, contributing to a 2.6% drop in the Nasdaq. In South Korea, the KOSPI index plunged nearly 30% from its June peak, causing multiple trading halts as investors liquidated positions in Samsung Electronics and SK Hynix.

Amid this turmoil, Moonshot is seeking up to $2 billion in fresh capital to expand infrastructure despite U.S. export controls on Nvidia chips. The company, which reached a $30 billion valuation in June, has engaged Goldman Sachs and China International Capital Corp to prepare for a potential initial public offering in Hong Kong. In the United States, the model's success fueled internal administration debates among advisors to President Donald Trump regarding national security and the regulation of open-source AI.