Moonshot releases Kimi K3, triggering share price collapse at Zhipu AI

Anastasios Angelopoulos, CEO of Arena.ai, described Kimi K3 on X as likely the most significant release of the year, in which open-source models from China overtook the US competition. Sriram Krishnan, former advisor to the Trump administration on AI policy, also assessed Kimi K3 on X as a milestone for the entire industry.

Market reaction at the Hong Kong stock exchange

The market reaction was severe: Zhipu AI shares fell at one point by 26.29 percent to 1,141 Hong Kong dollars on Friday at the Hong Kong stock exchange. According to Bloomberg, only around 13.5 percent of Zhipu shares remained freely tradable after the stock placement in early July 2026. Zhipu AI is thus among the stocks with the lowest free float in Asia.

Zhipu AI's price trajectory had already been volatile in the weeks prior. In June 2026, the stock had surged 33 percent in a single day after JPMorgan raised its price target. In early July 2026, it lost more than 17 percent amid a broad sell-off in chip stocks. The announcement of a capital increase by Zhipu had initially pushed the stock up by double digits, before it fell just as quickly.

Zhipu earns its money with open and commercial variants of its GLM model family. Unlike Zhipu, Moonshot is not publicly listed but is financed by Alibaba and Tencent. As a result, investors lack direct access to the success of the new model – the reaction focused on the publicly listed Chinese AI competitor.

Comparison with Deepseek R1

Most recently, the Chinese lab Deepseek had achieved a comparable success in January 2025 with the model R1. The release of the inexpensive model at the time led to a massive loss in value of around one trillion US dollars at the technology exchanges. Industry observers see parallels to the current market reaction.

Allegations and political dimension

The company accused Moonshot, Deepseek, and Minimax of having violated terms of service in order to improperly extract capabilities from Claude through distillation. This process is widespread in the industry but is classified as adversarial by the US government and is to be subject to stricter controls. Kimi K3 is likely to further intensify the debate over export controls.

The article was written by Claudia Stephan from the finanzen.ch team and published on July 17, 2026 at 08:39. The market reaction at the Hong Kong stock exchange shows how sensitively investors respond to technological leaps by Chinese AI labs – particularly when open-source models appear to be on par with proprietary systems.