Overseas stocks and US stock futures fell sharply Friday after technological advances announced by a Chinese artificial intelligence company intensified concerns that the AI spending spree driving this year’s market rally could be at risk.
The announcement came from Chinese company Moonshot, which unveiled Kimi K3, its most capable AI model, and one it said closed much of the gap with models such as OpenAI’s ChatGPT and Anthropic’s Claude.
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.
Breakthroughs by Chinese AI companies have rattled US markets in the past, such as in January 2025, when Chinese artificial intelligence company DeepSeek unveiled a model that challenged assumptions about US dominance in the technology sector.
Investments in AI and tech stocks have driven much of the market rally this year. AI chipmaker Nvidia has become the world’s most valuable company in recent years, but Nvidia shares (NVDA) were down more than 2% in premarket trading Friday. Shares of Google parent Alphabet (GOOG), which tumbled 4% Thursday slipped another 1% in premarket trading early Friday.
