Get Quartz in your inbox

Free daily briefing on global business news.

The AI race to the bottom is here

A little-known Chinese AI startup shook Wall Street after its Kimi K3 model challenged OpenAI and Anthropic

Raul Ariano/Bloomberg via Getty Images

A version of this article originally appeared in Quartz’s AI & Tech newsletter. Sign up here to get the latest AI & tech news, analysis and insights straight to your inbox.

U.S. chip stocks just took a tumble, and a Chinese startup most people had never heard of is the reason why.

Moonshot AI put out an open-weight model called Kimi K3 earlier this month that seemed to match what Anthropic and OpenAI charge a premium for. The semiconductor index slid into a bear market in response. If this sounds familiar, it’s because this happened in 2025 with DeepSeek, when a different Chinese lab showed up with a cheaper model that worked and hit the chip stocks the same way. 

By last week, some analysts were walking the DeepSeek moment 2.0 back, pointing out that a model Kimi's size still needs a lot of compute to run properly, making it less far ahead than it appeared at first blush. But the instinct to reach for that comparison, even a slightly premature one, says something about how fragile the AI story has gotten.

Closed in the West, Open in the East

Right now there are basically two models........

© Quartz