China's AI race is accelerating. Startup

Moonshot, saying its new model can

compete with top offerings from OpenAI

and Anthropic. Here to break down all

the latest headlines, we're calling in

for tech support with Yahoo Finance's

Dan Howie. All right, Dan. So, let's

start there. China's moonshots uh with

an AI model that says narrows the gap

here with American companies. Let's just

start there. Um what is Moonshot, Dan?

Explain that. And then how significant

is this news in your opinion? Yeah,

Moonshot is a a AI development uh

company AI AI developer similar to what

you uh would see from you know anthropic

open AI uh and it's uh open source uh or

open weights rather uh so that means

that people are able to download uh the

software and run it if they can uh for

free but a lot of people don't have

massive server farms so what moonshot

does is they uh will charge people uh to

actually run the software on their their

servers or uh you know in some instances

there are openw weight companies that

will charge uh if you're going to use

their uh application programming

interface uh commercially uh but so this

is uh Kim 3 uh K3 is what they uh they

also call it uh and so it's

consequential because of how uh powerful

it is or or how near frontier it is.

It's basically they say it has frontier

level capabilities um just shy of

anthropic stable 5 uh or openai's uh GPT

5.6 uh soul uh and those are their their

top models right now that that are

available. Obviously uh Anthropic also

has mythos 5 but that's in limited

availability for uh basically cyber

security uh kind of measures. Um and so

the fact that this company is able to to

offer this uh shows that uh the uh

Chinese uh AI companies are catching up

with the the frontier US labs very

quickly. Now uh it also uh however shows

that people are increasingly uh using

these models uh these open weights

models uh because of how inexpensive

they are to run. Uh and so that's one of

the big differentiators when it comes to

these types of companies and the the

frontier companies that we regularly

talk about the openis the anthropics the

Googles uh and what have you uh they do

have some uh open weight models uh but

their big frontier models are are

proprietary and so you have to pay to

access them and so uh a lot of times the

the cost is a lot higher to be able to

actually access those versus something

like a K3. I'm sure Dan, one question,

you know, investors might have as they

as they listen to all this would be,

okay, is all this historic American big

tech AI capex, is that actually money

well spent, Dan, if now we're seeing

Chinese companies move in and create

these strong models at much lower cost?

>> I think that's a question that uh

they're they're absolutely going to have

to answer. I don't think there there is

an answer just yet. Uh, you know, this

is kind of the not exactly but kind of

the same discussion that we had with

with DeepSeek when that came out. Um, I

believe that was last year uh with their

R1 model. Um, how they were able to

train it up using uh you know low power

uh GPUs or lower powered GPUs than than

uh state-of-the-art um and provide a

model that was very robust. Uh I I think

this is it's it's not exactly the same,

but it's it's one and the same, I think.

You know, is the spending worth it? Do

you actually need to be going all out uh

with these kind of high cost uh uh

moves, this big data center buildout

where you're, you know, you're uh using

this to train and then serve models up.

I mean, that still seems like it's going

to be something that needs to be uh uh

done. Uh you know, running these models

isn't exactly easy. So, I think the data

centers really uh are kind of maybe a

little bit more insulated from this, but

if it's if it's easier to train and run

these, then maybe they don't actually

have to be as powerful as uh they

currently are. But that that aside, um I

I do, you know, think that the the

anthropics and the open AIS probably

look at this and, you know, they say to

themselves, well, gez, we're we're

spending a lot of money to to train up

these models to develop them. uh and

then we have competition uh in China

that is able to do it uh seemingly for

for less money than than we are. Uh that

was also part of the discussion with

with Deep Seek uh you know at the time

it was open AI obviously being the the

main kind of company and the the kind of

question was well are they investing

properly? Are they doing this right? So

I think we really have to wait and see

what happens now uh on you know the the

flip side where where open AI and and

Anthropic or Google uh come from you

know we had that report the other day uh

from Bloomberg basically talking about

how Google uh was delayed with its

models. Google uh pushed back and said

that they're they're happy where they're

they're at and they're moving forward.

So you know we we still have that that

next model coming out. We'll still see

something coming out from anthropic and

open AI. I think what we've kind of

talked about generally is that these

models are going to continue to kind of

tick and talk back and forth where one

is in the lead uh one is uh behind the

one that was behind steps into the lead

again and now I think it's going to be

more uh opened up uh globally as we

start to see China continue to push

forward and forward and closer into the

frontier.

>> Well, that's what I wanted to ask you

about Dan. I mean just more broadly when

you think about this great AI arms race,

right? How quickly is that gap

shrinking, Dan, between the US and

China?

>> It it has been shrinking and it

continues to shrink. Uh, you know, we

just saw uh Anthropic and OpenAI debut

their their latest models, the Fable 5

uh and uh GBT 5.6 Soul uh last month. Um

and so, you know, it's it's not as

though it's been a long time uh since

they came out with with this. uh K3 is a

big step up from uh Moonshot's last AI

model. Um so I think that's an important

context there. Um you know obviously

Anthropic and Open AAI have been leading

in kind of the the frontier space and

front frontier just meaning it's you

know the the top of the top of the line.

Uh they've been leading in those spaces

for for quite a while. So you know

Moonshot uh hasn't uh and now they're

they're kind of right up there. And this

is all based on by the way on their

evaluations. So you know I think third

parties are going to dive in and and you

know confirm that uh or provide their

own kind of guidance on on what the

capabilities of the particular model are

but we are seeing this uh happen and you

know I think if you look at um uh I

think of you know Nvidia's uh Jensen

Wong he regularly brings up open source

models or openweight models uh during

presentations and he always features uh

the Himei models uh as well as the Quen

models uh you know uh the the open-

source kind of uh uh area. Uh Nvidia has

its own open- source models as well and

you know those are are always you know

relatively close to to you know the the

competing models from the west and so

you know at this point it it does feel

as though that that gap is shrinking.

>> On this same AI theme Dan Chris Mims at

the journal out with a new column how

AI's wider availability is good for

China not great for open AI and

anthropic. Mims asking if AI models turn

out to be a generalpurpose technology

like the automobile or electricity what

can they uniquely offer how do you

answer that Dan

I I think uh it's going to come down to

likely platform and ecosystem uh you

know one of the things that uh a lot of

these companies can do these these open

source or open weight companies uh is

offer surrounding services so that's you

know you have an a piece of open source

software uh you know the company that

that puts it out is then able to provide

a wrapper around it uh or you know

customer support things along those

lines and that could be something uh

that that uh OpenAI and Anthropic and

and their like uh lean further into

we've seen them you know kind of do that

sure you know we talk about uh their

latest models but you know and they they

powered their software but their

software on its own is really I think

what what's been driving uh their their

kind of popularity If you look at claw

code for instance uh yes that that does

run on on anthropics claude uh software

and yes that is a key element to it. Uh

but they als my my point is that there's

these different pieces of software that

they could market that are run on their

models that could be uh uh a kind of

hedge against this kind of

commodification uh of these uh model

capabilities. And so, you know, I I I do

think that they have other ways around

this. Um, and again, this is still

pretty early for for us to, you know,

just kind of throw our hands up and say,

well, everyone is equal now. Uh, I don't

think it's it's quite there yet. I

think, you know, there's still also a

lot of way to go in terms of, uh, AI's

overall abilities uh, when it comes to

these models. And so, you know, yes, uh,

K3 is is very capable. Uh but I do think

that you know obviously Anthropic and

OpenAI are still in the lead and we'll

see more advancements from them as well

as you know uh Moonshot Google Meta by

the way they're working on their uh Muse

uh line of models. So there's there's

still I think a a good amount of room

for this competition to continue. So is

your point, Dan, is is this why you

would see a Sam Alman moving into agents

and software and hardware because he's

building out this this entire platform,

this ecosystem.

>> Yeah, exactly. I mean, that's that's

why, you know, I mean, obviously AI

agents came along um you know, we were

talking about them in 2025. uh that was

supposed to be you know when they really

blew up and then obviously this year and

and you know uh early this year is kind

of I think when it's really hit the the

kind of broader zeitgeist uh but one of

the uh things that they are doing as you

point out is rolling out these these new

pieces of software so they had uh codecs

uh that allows uh you to do uh different

types of uh programming work uh then

they also have their own uh GBT work now

that's a piece of software uh where you

would do things like, you know, work

through uh spreadsheets or, you know,

put together uh slideshows, kind of the

things that everybody on the planet

despises having to do but does anyway.

Um that's supposed to help you uh along

those lines. Uh Anthropic has the same

thing. They have uh Claude Co-work. Uh

so, you know, you're seeing more of

these companies lean into how they can

serve up the models in different ways

that really provide, you know, a a boost

to not just them, but uh you know,

obviously the user. And so the more

people want to use that, the more seats

they can sign uh up when it comes to

different companies. Uh and so that'll

help them kind of grow their revenue

over time. And so, as I said, the models

are incredibly important to all of this,

but it's the software that they they

kind of run under that is just as

important.