Beijing-based artificial intelligence powerhouse Moonshot AI unveiled the latest version of its Kimi large language model, Kimi K3, on Thursday. The release of the model, which is described as the largest open-weight model ever released, has sent shockwaves through the global technology sector. According to Moonshot AI, the K3 model possesses 2.8 trillion parameters and a one million token context window, which serve as gauges of its capability. The startup claims the model performs “competitively” with Anthropic’s Fable 5, currently considered one of the most powerful publicly available models, and substantially outperformed
Anthropic’s Opus 4.8 and OpenAI’s GPT 5.6 Sol.
Market Sell-offs Triggered by Moonshot AI K3 Performance
The market reaction to the K3 debut was immediate. Leading chipmaker Taiwan Semiconductor Manufacturing Company saw its shares fall by 7% on Friday, despite reporting a 77% jump in quarterly operating profit. SoftBank, often viewed as a proxy for OpenAI, fell by 9.0%. Within the Chinese market, Z.ai, a competitor that has released a model rivaling Kimi, plunged by almost 30% in Hong Kong trading, marking its biggest slide since listing. MiniMax Group Inc also slid 16%. Steven Leung, an executive, noted that whenever there is a new AI model, the existing ones get hit because of concerns about competition.
Dario Amodei and Elon Musk Underestimate Chinese AI Development
The launch of K3 has effectively reset the AI race and surprised many observers. Anthropic CEO Dario Amodei had not expected a Chinese AI lab to release a model approaching the U.S.’s best offerings for another six months, a sentiment echoed by Tesla CEO Elon Musk, who suggested such a milestone might happen by the first quarter of next year. Paul Triolo, a partner at DGA-Albright Stonebridge Group, stated, The AI ecosystem in China is probably much better than people thought. Leonid Mironov, a portfolio manager at Gavekal Capital Ltd, called the K3 model “brilliant,” adding, In my use, it's clearly the best Chinese model ever.
Moonshot AI Seeks 30 Billion Dollar Valuation
Moonshot AI has priced the K3 at $15 per million output tokens. This is significantly cheaper than Fable 5, which costs $50 for the same level of output. The startup, which is currently in early talks to raise between USD 1 billion and USD 2 billion in a fresh funding round, is reportedly seeking a valuation of USD 30 billion. This would represent a sevenfold increase in under two years from its USD 4.3 billion valuation in December 2025. This follows a USD 2 billion round in May 2026 led by tech giant Meituan, which valued the company at USD 20 billion.
The company’s growth is underpinned by strong commercial metrics, with its Annual Recurring Revenue (ARR) breaching the USD 200 million mark in April 2026. This revenue is driven by the monetization of the Kimi chatbot and the integration of its application programming interfaces (APIs) into the workflows of Chinese corporations. As the company continues to secure capital, it faces the challenge of managing the exorbitant costs associated with training next-generation Large Language Models, where purchasing compute power requires billions in upfront expenditure. Despite severe U.S. semiconductor export controls, Moonshot AI’s ascent highlights the rapid pace at which Chinese developers are closing the technological gap with Silicon Valley rivals like OpenAI and Anthropic.
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