Chinese AI is catching up fast while spending far less, and that is bad news for US tech stocks and chipmakers.

• Chinese AI companies are matching or beating top US models for a fraction of the cost, spending a tenth of what US firms burn through.
• Moonshot's new Kimi K3 model, out July 27, is open for anyone to download free, undercutting expensive US models by half or more.
• China's share of global AI usage has jumped from near zero to over 60% in about 18 months, with US companies switching to cheaper Chinese models.
• Chip stocks are already sliding, down over 20% from their highs, as cheap Chinese AI raises doubts about the need for pricey US chips.
• This looks like a giant AI investment bubble unwinding, echoing the dot-com peak, with US markets at risk of a sharp drop.

Outlook: Expect pressure on Trump to run the economy hot and push for lower rates to prop up US AI, but if that fails a deeper market drop and recession get more likely.