Chinese AI startup Moonshot AI stunned developers on Thursday with Kimi K3, a massive new model that may rival the best American systems at a fraction of the cost. Moonshot says Kimi K3 contains 2.8 trillion total parameters, has a 1 million-token context window, and can work across text and images. In blind testing by AI evaluator Arena, developers preferred Kimi over every leading U.S. model for front-end coding, including Anthropic's Fable 5 and OpenAI's GPT-5.6 Sol. In Arena's broader text ranking, K3 also outranked the standard version of Anthropic's Opus 4.8 and tied Sol. Moonshot is offering K3 at prices well below the premium models it is challenging. Mozilla CTO Raffi Krikorian told Axios that U.S. AI labs are "clearly worried." Kimi's launch comes just before the 2026 World Artificial Intelligence Conference in Shanghai. Moonshot's domestic rival DeepSeek is also expected to release an updated model soon. Kimi has been available for only hours, and Moonshot says it will release K3's weights on July 27. At roughly $12 per million tokens, K3 is priced closer to Anthropic's own mid-tier offerings.