Rocks and AI Stocks Hit by Moonshot

The market just threw up another curveball.

A new Chinese AI model that promises to cave in the whole US AI-stock market gravy train.

We’ve seen this movie before.

Last year, it was Deep Seek that led the panic selling.

Today, it’s a model called Moonshot.

And while I’m not saying place your faith blindly in the US market to keep rallying relentlessly over the next three to six months.

I am saying that a change of focus is needed for ASX investors.

A bad sequel to DeepSeek

Moonshot’s model is called Kimi K3, and it landed last Thursday with 2.8 trillion parameters and a bold claim.

It reckons it can go toe-to-toe with America’s best AI models at roughly 70% lower cost.

If that’s even half true, the trillions being funnelled into US data centres and chips get harder to justify.

Wall Street’s main chip index fell around 10% last week and now sits more than 20% below its late-June peak.

That’s an official bear market, with global chip stocks shedding around US$3.3 trillion in under a month:

Source: Bloomberg

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Nvidia briefly handed the most-valuable-company crown back to Apple.

An odd turn of events.

The company selling phones for actual profit suddenly looks like the safe bet.

Korea shows what a washout looks like

South Korea copped the worst of it.

The KOSPI fell 8.77% last week, with circuit breakers halting trade on three of its four sessions.

Chipmaker SK Hynix dropped 15% in a single day, its biggest fall on record.

More than a million local trading accounts reportedly copped margin calls this month.

Here’s the kicker: foreign investors and institutions dumped stock all week, while Korean retail investors kept buying the dip.

It’s the swing-for-the-fences nihilism I wrote about before the May budget, playing out in Seoul.

Where the confusion sets in

ASX miners might feel like they live a world away from AI mania.

But copper, uranium and lithium have spent the past two years being marketed as the picks and shovels of the AI build-out.

Data centres need power, power needs uranium, and the grid behind it all needs copper.

So when the AI trade wobbles, the “real assets” now wobble with it.

ASX Materials fell 2.81% last week, with Pilbara Minerals [ASX:PLS] down 6.5% and Paladin Energy [ASX:PDN] down 16.3%.

BHP [ASX:BHP] cutting its copper guidance didn’t help either.

Meanwhile, missiles near the Strait of Hormuz sent Brent crude up almost 16%.

Higher oil means bigger diesel bills for miners and fresh inflation jitters for central banks.

Gold even cracked below US$4,000 during the week, in the middle of a shooting war.

I’ll admit it, this is a genuinely confusing environment for investors.

Commodities have been tied to the AI trade, and now everything seems to move together.

Who survives the washout

Warren Buffett said you only find out who’s been swimming naked when the tide goes out.

If this sell-off deepens, I suspect the survivors will be the boring companies with good business models.

That means real revenue, real margins, manageable debt and customers who stick around whether or not the AI dream pays off on schedule.

Apple pinching the crown from Nvidia last week might be the market quietly telling you the same thing.

For ASX investors, the change of focus starts with one simple question.

Strip away the AI story attached to a stock and ask: Does this business make money on its own two feet?

If the washout comes, that question will get answered for the companies that don’t.

At the very least, those commodity plays better have a good cash backing to ride out a potentially brutal washout.

Food for thought indeed.