US stock futures and Asian markets fell sharply on Friday after a Chinese artificial intelligence company, Moonshot, unveiled its most capable AI model, Kimi K3. This announcement intensified concerns that the AI spending spree driving this year’s market rally could be at risk.

Market Impact

Market indexes in South Korea and Taiwan closed down more than 6%, while markets in Japan closed down 4% on the news. Nasdaq futures were down 1.6% early Friday, with futures tied to the Dow and S&P 500 also lower.

Kimi K3 is the world’s 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.

Another headwind for stocks was a continued rise in oil futures due to 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.

Original reporting: KEYT (Ventura/Santa Barbara) — read the source article.