Financial markets and AI enthusiasts are increasingly taking notice of what's happening in China.Over the weekend, a Chinese start-up known as Moonshot, released a new AI model called Kimi K3 that rivals the flagship versions from Anthropic and OpenAI, but at a fraction of the price.What does this mean for the race to dominate the AI future?Image DetailsOver the weekend, from out of nowhere, a new Chinese start-up known as Moonshot, released an AI model that not only rivals and, on some measures, even outperforms the flagship versions from Anthropic and OpenAI, but also, it's at a fraction of the price.(Unsplash: Steve Johnson)Program:More from ABC News Top StoriesTranscriptDavid Coady: China's making big moves in AI, putting leading American AI firms under pressure. So what's new in AI and what could it mean for anthropic and open AI and investors on Wall Street? It all has to do with new AI models being released out of China. Models are the engine room of AI, processing the inputs, whatever people ask of it, and generating the outputs from a simple task to generating text, computer code or images. Chinese company Moonshot's latest model is called Kimi K3 and it's said to be competitive with the leading US versions. There are some teething problems though. Moonshot has had to pause subscriptions after demand surged and they hit a bottleneck on computer capacity. Chinese firms also can't access some of the most advanced computer chips made by US tech company Nvidia, meaning they're constrained in the AI race. But if they can work around that and achieve the same or better results on less powerful hardware, the whole business model of some of the US AI firms is under threat. The Chinese models are cheaper and with expensive equipment, users can even download the files to run them at home. According to Bank of America analysis, the price to use K3 is the highest yet for a Chinese AI model, but it's still half the cost of OpenAI's high-performing model. What does it mean for investors on Wall Street? Well, if Kimi K3 sparks a price war for AI, that jeopardises the return on investment for the US tech giants. One hint may be in what's happening to the stock price of Elon Musk's SpaceX, since it listed in June. The valuation that pushed Musk to trillionaire status is falling, and it's now about half the value of what it was at its peak. SpaceX is a fairly small player in the AI market though, and it isn't just AI. It has Social Media Platform X, a space rocket business, and satellite internet. But if its valuation is under threat, what does that mean for the sky-high valuations of other big AI firms and their ability to keep raising money to pay for the expensive chips that keep their businesses afloat? There are more Chinese models coming, and this battle is just beginning.