\n Kimi K3 is the world\u2019s largest open-source model, according to Moonshot. Open-source models can pose problems for US AI companies that are trying to charge subscriptions to access their closed-source models. That can also hurt the chipmakers that are betting on a continued AI spending spree.\n <\/p>\n
\n A popular index tracking semiconductor chip stocks fell 1.6% Friday, putting it down 20% since hitting a record high in late June \u2013 and entering a technical bear market. The index was down 10% this week, its worst week in over a year, although it is still up 65% this year.\n <\/p>\n
\n After soaring in recent months on AI enthusiasm, chipmakers are dropping sharply. Chipmaker Micron (MU<\/a>) is down about 30% since hitting a record high in late June but is still up almost 200% this year.\n <\/p>\n \n Competition from alternative, open-source models could hurt forecasts for AI companies\u2019 growth and complicate plans for massive infrastructure spending, which could hurt revenue projections for chipmakers and companies betting on the AI boom.\n <\/p>\n \n Breakthroughs by Chinese AI companies have rattled US markets in the past, such as in January 2025, when Chinese artificial intelligence company DeepSeek<\/a> unveiled a model that challenged assumptions about US dominance in the technology sector.\n <\/p>\n \n While Kimi K3 rattled markets Friday, some investors said it needs to be seen just how impactful it will be. US stocks quickly recovered from the DeepSeek scare in January 2025, and tech companies continued to spending on the AI infrastructure buildout.\n <\/p>\n \n Shares of Google parent Alphabet (GOOG<\/a>), which tumbled 4% Thursday after reports it is delaying the launch of a flagship AI model, slipped another 2% Friday.\n <\/p>\n \n Nvidia shares (NVDA<\/a>) were down more than 2% Friday. The company\u2019s market value briefly fell as low as $4.85 trillion, dipping below Apple\u2019s and returning Apple to the status of the world\u2019s most valuable company. Apple shares (AAPL<\/a>) rose 0.1% and are up 15% this month.\n <\/p>\n \n It\u2019s been six weeks since the S&P 500 and Nasdaq hit records highs. The S&P is down about 2% since then, while the Nasdaq is down about 6%. Nerves about whether investors were overpaying for AI and tech stocks were already resurfacing in recent weeks, and the announcement of new AI model that could rival the top US models adds to the anxiety.\n <\/p>\n \n \u201cWe have been concerned over the past few weeks that tech, especially semis, had run too far, too fast,\u201d Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, said in an email. \u201cReally markets were just looking for any excuse to sell.\u201d\n <\/p>\n \n But Samana said he remains confident about the longer-term trajectory for American AI companies\u2019 earnings and spending. \u201cChinese competition is not new and we believe the overall pie will grow enough to sustain US tech companies,\u201d he added.\n <\/p>\n \n All told, the S&P 500 is still near record highs. Investors have also rotated into other sectors like financials while moving away from tech stocks. An exchange-traded fund tracking tech stocks is down more than 7% this month while one tracking financials is up 5%.\n <\/p>\n \n Another headwind for stocks was a continued rise in oil futures on US attacks overnight in Iran raising fears about the flow of oil from the Persian Gulf again being cut off. Rising oil prices could drive new inflation concerns which had abated as oil fell since early June on hopes of the war there being over.\n <\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/07\/1784366832_1_gettyimages-2285793325.jpg\")
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