Markets may have just experienced their second DeepSeek shock, this time thanks to a Chinese AI lab named after a Pink Floyd album

Moonshot AI, a Beijing-based AI startup, unveiled the latest version of its Kimi large language model on Thursday, promising performance close to Anthropic's Fable 5 at a fraction of the cost. The company said Kimi K3, the largest open-weight model ever released, performed competitively with Fable 5 and substantially outperformed Anthropic's Opus 4.8 and OpenAI's GPT 5.6 Sol. Moonshot's officially released benchmarks consistently rank K3 among the top three AI models, and an independent benchmark from Arena.AI put K3 as the best model currently available, ahead of Anthropic. Many observers, including Anthropic CEO Dario Amodei, did not expect a Chinese AI lab to release a model approaching U.S. offerings for another six months. Moonshot priced K3 at $15 per million output tokens, cheaper than Fable 5 at $50. The launch rattled investors who saw it as undermining the view that U.S. firms can maintain their lead by outspending Chinese competitors on computing power. Taiwan Semiconductor Manufacturing Company fell 7% on Friday despite a 77% jump in quarterly operating profit. SoftBank fell 9.0%. Z.ai plunged almost 30% in Hong Kong trading. The Nasdaq 100 was down 1.0% as of 2:00 p.m. Eastern time. Nvidia shares fell 1.2%, briefly forfeiting its lead as the world's most valuable company to Apple. Meta shares plunged over 2.4%. Moonshot's Chinese name comes from Pink Floyd's album The Dark Side of the Moon, founder Yang Zhilin's favorite album.