Ask Your Advisor: Who is China’s Moonshot AI?

Remember how China rattled the global artificial intelligence (AI) landscape with the DeepSeek-R1 model in 2025? Recently, Chinese AI developers have unveiled a new AI model that has once again caught the world’s attention—not because it’s smarter, but because it makes AI significantly cheaper and more accessible.

In the current AI race, capital expenditures are now a growing concern as more advanced models cost more. Now with the onslaught of numerous AI developments across nations, the challenge is no longer simply who has the most powerful AI, but who can deliver it most efficiently and profitably. 

On July 17, Chinese startup Moonshot AI unveiled Kimi K3, a new large language model that rivals leading AI systems, including its US competitors OpenAI’s GPT and Anthropic’s Claude, on many coding and reasoning tasks.  

Like DeepSeek, Kimi K3 is drawing attention for delivering competitive performance at a much lower cost. The new model therefore challenges the industry belief that leading-edge AI requires heavy spending on data centers and more advanced chips.

While DeepSeek was the surprise AI model that catalyzed the China AI wave, analysts now refer to Kimi K3 as the evidence that China’s progress is becoming more repeatable.

Two of the US’s leading AI developers are OpenAI and Anthropic. OpenAI introduced ChatGPT to the world in November 2022. Later, Anthropic introduced Claude in March 2023. These two AI developers utilize what is called a closed AI system. This means that users can only interact with them through official web platforms, apps, or paid developers rather than accessing the raw base models on their own computers.  

On the other hand, China’s Kimi K3 and DeepSeek utilize an open-weight AI system. Unlike a closed AI system, an open-weight AI system allows users to download the model, modify it, and run it on their own servers for free, positioning it for easier adoption and a wider market globally.

Think of it like buying software versus receiving the blueprint to build your own version. ChatGPT and Claude are programmed to function as designed. Any alterations can only be made by the original developers. Meanwhile, Kimi K3 and DeepSeek allow users to alter their programs.  

By keeping it open, Chinese AI models reduce development costs while offering greater flexibility and faster adoption of their service.

Lower AI costs = faster adoption

One of the biggest implications of China’s new AI models is the potential to lower AI adoption costs. Until recently, businesses seeking advanced AI capabilities often relied on premium models, which can be expensive depending on usage. Lower-cost alternatives like Kimi K3 give companies greater flexibility to choose the model that best suits their needs and budget.  

While businesses may still use premium models for complex tasks, more affordable options can handle simpler applications, helping reduce operating costs and making AI accessible to a broader range of users.

More competition, better developments

The emergence of capable and lower-cost AI models intensifies competition across the industry. Rather than competing solely on performance, AI developers are starting to differentiate themselves through pricing, speed, accessibility, and openness.  

As more companies release competitive models, AI may gradually become a commodity, with underlying models more widely available and success depending on delivering value through cost efficiency, ease of use, or specialized applications.  

However, this could put pressure on pricing and profit margins, particularly for companies that rely on charging premium fees for access to their models.

New AI investment opportunities

As AI becomes more affordable and accessible, businesses across sectors such as consumer services, healthcare, manufacturing, and financial services may be able to integrate AI into their operations more quickly.  

This could shift the next phase of the AI story from simply building the most advanced models to expanding real-world adoption, creating new opportunities beyond the largest technology companies. 

Despite the growing popularity and optimism surrounding China’s latest AI advancements, Chinese AI companies continue to face geopolitical and regulatory challenges. Tensions between the United States and China have led to export restrictions, limiting access to advanced semiconductor technology needed to train cutting-edge AI models.  

At the same time, security concerns and ongoing debates over intellectual property and model development continue to attract policymakers' scrutiny. These factors could influence the extent to which Chinese AI models are adopted in Western markets and may shape the competitive landscape in the years ahead. 

Rather than viewing AI as a race with a single winner, investors may increasingly see an ecosystem where premium and low-cost models coexist. The development of competitive Chinese AI models suggests that the next phase of AI investing may be driven less by technological breakthroughs alone and more by affordability, accessibility, and commercial adoption.

As the next AI wave unfolds, this creates new opportunities for investors seeking exposure to this fast-evolving theme.  

For those looking to participate in the long-term growth potential of artificial intelligence, investing in individual companies such as Moonshot AI is not necessary. Funds are an option, too. They include Metrobank's Multi-Themed Fund of Funds, which provides exposure to companies at the forefront of AI and related technologies through a diversified portfolio of global investments.

To learn more, you can reach out to your Investment Specialist or Relationship Manager today and explore how you can invest in the evolving AI story. 

MARIA CHRISTINA “YNA” VIRTUDAZO is an Investment Counselor at Metrobank’s Institutional Investors Coverage Division. Her work involves analyzing High Net Worth clients’ portfolios and providing actionable insights and recommendations to better enhance their portfolios’ overall returns. She is a licensed Fixed Income Market Salesperson of the Securities and Exchange Commission and a certified Unit Investment Trust Fund (UITF) salesperson. She graduated with a bachelor’s degree in business administration from the University of the Philippines – Diliman. She spends her free time listening to K-pop, writing fanfiction, and watching Netflix series and K-dramas.