China's Moonshot unveils Kimi K3 AI model as chip stocks tumble worldwide

Chinese startup Moonshot AI on Friday, July 17, 2026, unveiled its new AI model, Kimi K3. The company says the model, with 2.8 trillion parameters, is the world's largest open-weight model and trails only the most advanced US models on benchmark tests. The full model weights are due for public release on July 27.

The launch triggered a wave of selling in semiconductor and AI stocks, with investors comparing it to the 2025 DeepSeek moment, when a Chinese lab released a model on par with US rivals at a fraction of the cost. The Philadelphia Semiconductor Index (SOX) fell about 24% from its late-June record on Friday, formally entering a bear market and heading for its worst week since spring 2025. Moonshot, backed by Alibaba, has been valued at around $31.5 billion in an ongoing funding round.