New Chinese AI model sparks "DeepSeek moment" concerns, causing a decline in US chip stocks.
The unveiling of a new generation of large models by Chinese artificial intelligence (AI) startup Moonshot AI has sparked market concerns about further intensification of AI competition, causing U.S. tech and chip stocks to fall on Friday (July 17), with investors worried that the market would repeat last year's " DeepSeek moment."
Bloomberg reported that U.S. markets closed on Friday with the Nasdaq down 1.4% and the S&P 500 down 1%. The Philadelphia Stock Exchange Semiconductor Index briefly approached a technical bear market before narrowing its losses to about 1%.
Dark Side of the Moon released the Kimi K3 model, claiming its performance rivals leading models from OpenAI and Anthropic. Following the announcement, investors quickly drew parallels to the "DeepSeek moment" last year, when the Chinese AI company DeepSeek launched a low-cost model, leading to a massive sell-off of US AI stocks.
However, as the market further digested the news, the selling pressure eased somewhat.
Vital Knowledge analyst Adam Crisafulli said the market's view on Kimi K3 has become more rational. He pointed out that Kimi K3 is a large-scale model that theoretically still requires a lot of computing power, so it will not reduce the demand for AI computing infrastructure, but may put pressure on the market share of OpenAI and Anthropic.
Matt Britzman, senior equity analyst at UK financial services firm Hargreaves Lansdown, believes that this round of chip stock pullback is more like an adjustment after hot trading became too crowded, rather than a sudden reversal of the AI investment logic.
He said that as long as large technology companies continue to confirm their AI capital expenditure plans, off-market funds are likely to flow back into the relevant sectors. What is currently more like a healthy adjustment in the hottest area of the AI market, rather than the end of the AI investment boom.
The market has recently begun to reassess the prospects for AI investment. Following the recent earnings report from Taiwan Semiconductor Manufacturing Company (TSMC), the market is again focusing on whether AI capital expenditures are sufficient to support high valuations. This year, investors have also gradually rotated funds to other sectors, partly because they believe that the massive investments in AI have not yet yielded commensurate returns.
Source: [Lianhe Zaobao] (https://www.zaobao.com/finance/world/story20260718-9382880)