How China's Kimi K3 triggered Wall Street's worst AI stock selloff of the Year

On the day Kimi K3 was released, US semiconductor stocks suffered their worst single-week performance of the year, marking the sharpest weekly retreat since April 2025. Major overseas outlets including The Wall Street Journal, Bloomberg, and CNBC reported that Kimi K3's debut was the direct trigger behind the downturn. Peng Jiahao of the Shanghai Artificial Intelligence Research Institute noted that many US experts now acknowledge China's latest open-source model rivals — and in some respects surpasses — America's closed-source models, even in coding, long considered the ultimate moat for US frontier labs. As he put it, when an open-source model performs at the top level while costing a fraction of a closed-source one, it poses a direct threat to the valuation story underpinning US AI.

Bloomberg dubbed the launch a new "Kimi moment," echoing last year's market-shaking "DeepSeek moment," and said Kimi K3's overall performance now rivals flagship products from leaders like OpenAI and Anthropic. Donorio, a partner at Crosslink Capital, said this shows China is closing the gap with frontier models in open-weight AI, calling it a likely boon for AI adoption and productivity gains over time. Bloomberg's Elstrom added that with 2.8 trillion parameters, Kimi K3 is a serious threat to US frontier labs that had planned to charge premium prices — pressure that could complicate OpenAI's and Anthropic's efforts to go public at valuations above a trillion dollars each.

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