Moon landing: Why this Chinese AI model rattled global sharemarkets

China’s Moonshot AI, co-founded by former Google and Meta researcher Yang Zhilin, rattled western markets last week with the release of an impressive new model called Kimi K3. Now, the company reportedly plans to list publicly with a valuation of more than $43 billion.The company says its open-weight AI model outperforms all rivals with the exception of the most powerful; Anthropic’s Claude Fable 5 and OpenAI’s GPT-5.6. Demand for the massive 2.8 trillion parameter model was so huge over the weekend that Moonshot had to temporarily pause sign-ups. Users have enthused about its coding and natural language capabilities, and compared its long context and efficiency favourable to the most popular US-developed models.Moonshot co-founder Yang Zhilin has a PhD and previously worked at Google, Meta and Huawei.GettyOn release last week, a global sell-off affecting chip-makers and big tech wiped out trillions in market capitalisation. Bloomberg and others are now reporting that Moonshot has advised investors it hit annual recurring revenue of $US300 million ($430 million) in June, and is wrapping up a funding round that may value it at more than $US30 billion ($43 billion), ahead of a listing in as early as six months.Though still in his early thirties, Zhilin has a PhD in computer science from Carnegie Mellon University, is a serial startup founder and has worked at Google, Meta and Huawei. He co-founded Moonshot in 2023. It has largely lived in the shadow of other Chinese AI startups DeepSeek and Z.AI before now, though its long-memory chatbot Kimi began attracting hype earlier this year. With K3, the company has burst into mainstream relevance.The model is the best-performing open-weight technology yet to emerge from China. Open-weight refers to an AI model where the trained files are available for anyone to download. It’s not a fully open source, in the sense that users don’t necessarily have insight into how the model was trained. But open weight models (like Moonshot’s K3, and Meta’s Llama) differ significantly from the closed offerings of the big tech companies because anyone can run, host or customise them. OpenAI, Anthropic and Google only offer access to their models through paid APIs.The market reaction to Moonshot’s news mirrors the shockwaves we’ve seen previously whenever a Chinese lab makes a major AI breakthrough, with temporary sell-offs in Western semiconductor and AI tech stocks, as investors reconsider assumptions about how wide the US lead in AI technology actually is.However, Moonshot’s move is quite unlike the early DeepSeek releases that previously prompted a knee-jerk panic. While DeepSeek’s focus on ultra-low prices stoked fears of a democratisation and rapid commoditisation, Moonshot shows that the open-source gap has shrunk faster than expected. Developers now have access to frontier-class reasoning and coding capabilities, without needing to lock themselves into closed APIs. The company’s reported revenue shows that businesses are willing to pay to build on it.But that’s not to say Moonshot is cheaper or easier to run than any other mid-tier enterprise AI, including the big western ones. K3 is a massive model that requires serious hardware to host; you can’t simply download and run it on a regular PC. Consumer users will go through Moonshot’s Kimi chatbot to access the model, and that comes with a tiered subscription. Enterprises and developers will rent access to servers or custom installations, and the Chinese company’s API pricing is in line with competitors. Of course, licensing agreements stop another company installing K3 and on-selling access without giving Moonshot a cut.History suggests the market will settle as investors realise that a rising tide lifts all boats, and that increased competition and a multi-polar market for AI may ultimately be good for the likes of Nvidia, TSMC and even rival AI firms. But K3 has proven that open models can rival closed ones when used for high-value tasks, like coding and agents.Get news and reviews on technology, gadgets and gaming in our Technology newsletter every Friday. Sign up here.Tim Biggs is a writer covering consumer technology, gadgets and video games.Connect via X or email.From our partners