Nvidia, AMD, TSMC shares fall as China's Moonshot AI unveils rival model

The sharp decline across semiconductor and AI-related stocks reflects a collision of two pressures: domestic weakness in Japan's technology sector and renewed concerns about competition from Chinese AI developers. Japan's Nikkei 225 posted its worst weekly performance since April 2025, with memory makers like Kioxia suffering the steepest losses (nearly 16%), signaling broad selloff pressure in the region. Simultaneously, Moonshot AI's introduction of Kimi K3—a 2.8 trillion-parameter open-weight model—underscores the accelerating pace at which Chinese developers are closing the capability gap with U.S. systems, a dynamic that investors appear to view as a headwind to semiconductor demand growth.

The timing is particularly notable because TSMC had reported stronger-than-expected quarterly results just a day earlier, yet the stock still fell nearly 4% in premarket trading. This disconnect suggests that sentiment has shifted from fundamentals to competitive positioning and macro risk, with investors reassessing how sustained competition and regional tech weakness will affect the AI semiconductor cycle. The broad nature of the selloff—hitting memory suppliers, chip designers, and foundries alike—indicates a systemic repricing of expectations around demand for AI infrastructure rather than company-specific weakness.