Large Language Models (LLM) & AI Market: Frontier AI and the Kimi Delusion

The article analyzes market reaction to the release of Kimi K3, a 2.8-trillion-parameter open-weight model from Moonshot, and challenges the narrative that the model alone caused a broader sell-off. It notes a sharp market decline on July 17 — including drops in TSMC, SoftBank, and the Nasdaq — which traders labeled the "Kimi Moment." The author argues this attribution is incorrect on two structural grounds: (1) the visible catalyst (Kimi K3) is an attribution substitution for longer-running geopolitical damage to the chip supply chain, and (2) the bearish interpretation is inverted because cheaper open models are more likely to expand demand, push closed labs outward, and do not necessarily reduce hardware capex needs. The piece frames the market narrative as the "Kimi Delusion."