AI Bubble Update: Kimi K3 Sends China into Chaos

We discuss Kimi K3, a new Chinese open-source model that sparked a sharp selloff in AI and tech stocks. 

The real question: does it signals a real shift in the AI race between the U.S. and China? And who will the biggest winners be: model labs or the compute and infrastructure providers?

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TIMESTAMPS

0:00 Kimi K3 Shakes Markets
0:49 Open Source Disruption
2:54 China’s AI Message
5:22 Demand Outstrips GPUs
8:59 Open Source Backlash
13:58 The Bubble Debate
17:38 Infrastructure Wins Long Term
22:36 Breakthroughs Still Loom
24:48 Outro and Updates

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RESOURCES

Josh: https://x.com/JoshKale

Ejaaz: https://x.com/cryptopunk7213

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Not financial or tax advice. See our investment disclosures here:
https://www.bankless.com/disclosures⁠

Josh works with Anthropic as a contractor. All views expressed are his own and do not represent Anthropic, its leadership, or its affiliates. Nothing in this episode is investment advice.

Creators and Guests

Host

Ejaaz Ahamadeen

Host

Josh Kale

What is Limitless: An AI Podcast?

Exploring the frontiers of Technology and AI

Josh:
China just released KimiK3, the most powerful model to ever come out of the

Josh:
country. The question on everyone's mind is, is this going to create a bubble

Josh:
or is it already happening in front of us?

Josh:
KimiK3 is the most impressive model leapfrogging the frontier American models

Josh:
and some benchmarks and doing so in a way that is significantly cheaper and open source.

Josh:
So the conversation over the entire weekend is not only is there a bubble,

Josh:
but how credible, how strong is the American moat as it comes to China.

Josh:
We always discuss the timelines and how America is normally ahead by,

Josh:
I mean, let's say six to 12 months.

Josh:
It seems like that timeline has kind of shrunken a little bit.

Josh:
And you see how these two countries are kind of juxtaposing the way they're

Josh:
going about it. There was two speeches that happened on Friday.

Josh:
One was from America blaming China on rigging votes. And the other was China

Josh:
very strongly presenting themselves as the up and coming AI leader.

Josh:
So there's a lot to unpack here, probably starting with the market,

Josh:
which was nothing but red over the last couple of days because you have to assume

Josh:
there is a little bit more uncertainty than normal as it relates to

Josh:
just ai models in general and how how it turns into china i mean look at this

Josh:
look at the screen share that is a wall of red

Ejaaz:
Yeah, so last week was basically China's retaliation to the American frontier

Ejaaz:
models, and it happened in a pretty big way.

Ejaaz:
As you mentioned, Moonshot Labs, which was the creator of this model called

Ejaaz:
Kimi K3, which is completely open source, is now the largest open source model ever.

Ejaaz:
It comes in at around 2.8 trillion parameters, and it's super cheap to use when

Ejaaz:
you compare it to Fable 5 and GPT 5.6.

Ejaaz:
Now, the question on everyone's mind is, is it necessarily good enough?

Ejaaz:
If you look at the NASDAQ market and how it responded last week,

Ejaaz:
it shaved off hundreds of billions

Ejaaz:
of dollars, like it was down completely in response to this model.

Ejaaz:
The reason being is, it doesn't matter if it competes with Fable 5 or if it's

Ejaaz:
as good as GPT 5.6, what matters is the cost.

Ejaaz:
When you look at Fable 5 specifically, you're paying around 50 to 56 bucks per million tokens input.

Ejaaz:
And when you compare that to Kimmy K3, you're paying around 50 cents to a dollar.

Ejaaz:
So if you're an enterprise that is burning tens to hundreds of millions of dollars,

Ejaaz:
or if you're a software engineer that is spending all your tokens on an expensive

Ejaaz:
$200 a month membership, you might want to consider an alternative model.

Ejaaz:
And in this case, it'll be a Chinese model. Now, the craziest part about this

Ejaaz:
is the valuation of Moonshot Labs in January of this year was $4.3 billion.

Ejaaz:
Now, after they released Kimmy K3 just last week, they announced that they're

Ejaaz:
raising at a new valuation of $30 billion.

Ejaaz:
That is still 30x cheaper than OpenAI's $1 trillion valuation.

Ejaaz:
And Anthropic is valued at the same amount. So the question in everyone's mind is,

Ejaaz:
are the American labs overpriced or are the Chinese labs underpriced?

Ejaaz:
We're going to have a series of Chinese IPOs coming from the AI labs,

Ejaaz:
such as DeepSeek and Moonshot over the next roughly six months or so.

Ejaaz:
And the Chinese president Xi Jinping reinforced this in a very big way on Thursday,

Ejaaz:
where he took the stage in Shanghai in person at the World AI Conference,

Ejaaz:
the first time since 2018 to make his first public commentary on the AI landscape.

Ejaaz:
And he had some pretty major takeaways for everyone.

Josh:
Yeah. Like you mentioned, this is the first time since 2018 taking the stage.

Josh:
This is a fairly big deal. And his kind of thesis could be summarized in one

Josh:
line, which is AI should not be a solo performance by a single country.

Josh:
It should be a symphony of international cooperation, followed by a shot at

Josh:
Washington, which said we should jointly oppose overstretching the national

Josh:
security concept in the field of AI or placing one country's security over that of others.

Josh:
And it was really interesting. I mean, I mentioned this in the intro briefly

Josh:
to see that kind of juxtaposed against the other speech that was happening simultaneously

Josh:
on Friday night, but back in Washington, where President Trump,

Josh:
he went on to accuse Beijing of the largest compromise of election data in history.

Josh:
So while one president is standing up in front of the AI conference for the

Josh:
first time, offering the world basically free frontier intelligence through

Josh:
these open source weights, another one is complaining that we've been robbed and

Josh:
That we're not simultaneously while this kind of lead that we have is continuing to shrink.

Josh:
And there's this post he says, I shared it with you just before recording.

Josh:
I loved it. It was from Travis Kalanick.

Josh:
And for those who don't know, Travis Kalanick, founder of Uber,

Josh:
he's the guy who has famously went into China and convinced them somehow to

Josh:
allow him to let robo taxis into this country is very familiar with how they were culturally.

Josh:
He said, in my experience, China rules different on these topics.

Josh:
If you're in China and you tell a business colleague, dude, they frauded me, they took my stuff.

Josh:
The natural response is, why'd you let them get your shit together?

Josh:
And I think this is kind of beginning to show the two differences in cultures.

Josh:
We know that China doesn't have any regard for IP and therefore is able to distill

Josh:
the models, is therefore able to rip off all of our IP. And that's how they're

Josh:
able to accelerate so well.

Josh:
I think my question now, Ejaz, is are they actually going to ever be able to

Josh:
flip the United States in terms of capabilities if they continue to just distill and follow along.

Josh:
It feels like they can maybe get that lead closer and closer,

Josh:
but in order for them to actually break through and create something better,

Josh:
it will require some technical breakthrough that they haven't quite shown.

Josh:
So when we look at the market, does it feel overreactive that it's down so much,

Josh:
even though they don't actually have a frontier model and getting a true frontier

Josh:
model would imply a lot of breakthroughs that they've never been able to do.

Josh:
I mean, they can't even serve this model yet. They're overflowed with just Kimmy requests.

Ejaaz:
Yeah. And I think what you're referring to in that last sentence is Moonshot

Ejaaz:
Labs announced over the weekend that they don't have enough GPUs to support

Ejaaz:
everyone's signup and request.

Ejaaz:
So they've had to pause new subscriptions. So it's an over-demand.

Ejaaz:
And I actually have this really cool chart from the folks at Open Router who

Ejaaz:
basically allow anyone and everyone to get access to these open models as well

Ejaaz:
as American frontier models.

Ejaaz:
And it shows that 58%, near 60% of users in America now are using open source Chinese models.

Ejaaz:
So we're now flipped from using American frontier models in the majority of

Ejaaz:
token expenditure to Chinese models, which is very significant.

Ejaaz:
But to answer your question more directly, Josh, it depends how you define what a breakthrough is.

Ejaaz:
Now, a breakthrough in itself is Kimi K3. It may not be Fable 5 worthy,

Ejaaz:
but the The fact that it's been able to catch up to within like,

Ejaaz:
you know, striking distance of Fablefy, but not quite as good,

Ejaaz:
but at a fraction of the cost,

Ejaaz:
could be considered a breakthrough. If you look at their white paper,

Ejaaz:
you've seen that there's a bunch of new research things that they've been able to figure out.

Ejaaz:
I think they call it Kimi Delta, attention attenuation, or whatever the hell

Ejaaz:
that's called, which allowed them to efficiently scale two and a half times

Ejaaz:
more efficiently than any other frontier lab has done.

Ejaaz:
Now, if you look at America, they haven't been able to do this.

Ejaaz:
What they have been able to do is throw tens to hundreds of billions of dollars

Ejaaz:
at the problem and hope that it would fix itself.

Ejaaz:
So more efficiently for a much cheaper cost.

Ejaaz:
Now, if you ask me if the American labs stopped putting out new models,

Ejaaz:
so let's say we never got anything later than Fable 5 from Anthropic going forwards,

Ejaaz:
I think it would take Chinese labs significantly longer to catch up with them

Ejaaz:
simply because they have been distilling. You know, you talk about their disregard for IP.

Ejaaz:
That is primarily the way that they've been able to catch up to America frontier

Ejaaz:
models. Now, my question that I throw back to you maybe, I'm curious what your

Ejaaz:
thought is, is distillation necessarily malpractice?

Ejaaz:
I think everyone is kind of doing it, like I looked at,

Ejaaz:
Thinking Machine Labs last week, which is Mira Morati, ex-OpenAI CTO's new lab.

Ejaaz:
And they announced this new open source model. It's their flagship model.

Ejaaz:
It got a lot of attention.

Ejaaz:
Every American spokesperson was like, hey, American open source is so back.

Ejaaz:
Look at this new cool model.

Ejaaz:
Now, if you look at the white paper, they basically distilled DeepSeq v4's architecture from China.

Ejaaz:
So we're kind of like all distilling and copying everyone's kind of trends and

Ejaaz:
research to collectively make better models.

Ejaaz:
And I don't necessarily know if it is a bad thing. The final thing I'll say

Ejaaz:
is Fable 5 was restricted and banned for a while.

Ejaaz:
It's only actually been fully live for like three weeks right now.

Ejaaz:
There is no way Moonshot Labs was able to fully distill the model and create

Ejaaz:
Kimi K3 in that shorter time span. So they're doing something different, is what I'm saying.

Josh:
Yeah, well, Fable is like one model. I'm sure they have been doing this with others.

Josh:
And I think when it comes to research, like algorithmic improvements,

Josh:
similar to what Murmurati's company was doing, it's a little bit different than blatant IP

Josh:
copying, where like, sure, there are these technical techniques,

Josh:
like the transformer that everybody uses, but then there is the actual IP built on top of it.

Josh:
And that is where I mean, it is just illegal to do these things is illegal to

Josh:
steal other companies information like this.

Josh:
And it's obvious that China doesn't have any regard for this.

Josh:
So I would say it is different in the sense that this is just like blatant IP

Josh:
ceiling. And while it is sure a gray space and a lot of companies distill from a lot of places.

Josh:
This is just blatant, illegal...

Josh:
Disregard for copyright. And I think that is like where you can comfortably draw a line.

Josh:
If you are the United States, I worry that perhaps there is an over-indexing

Josh:
coming just before we were recording, Ejaz, you mentioned there's a possibility

Josh:
that open source models are going to start to have some pushback,

Josh:
perhaps from the government.

Josh:
There is some resistance happening towards that.

Josh:
And should that happen, I do worry what the world looks like then,

Josh:
because when you think about the costs of these things, like frontier intelligence

Josh:
models, You're paying, what, $10 to $50 per million tokens.

Josh:
And for these frontier open source models, these Kimi models,

Josh:
you're paying, what, $1, $0.50, maybe $2.

Josh:
Yeah, $0.50. And it's like that, if those start to get banned here in the United

Josh:
States, you're almost in a way forcing consumers to pay a significantly higher

Josh:
price for similar levels of intelligence.

Josh:
Like if you're paying a 50 times multiple for a model that is perhaps 10% better,

Josh:
that seems like it is problematic for just general users in the United States

Josh:
who don't want to pay perhaps $50 per million tokens, but they also want access

Josh:
to close to the frontier.

Josh:
There isn't really an option for them right now. And banning these open source

Josh:
models also doesn't seem like a good place to be either.

Ejaaz:
I think people are just tired of overpaying and they're starting to kind of

Ejaaz:
like look at their wallets and budget spends and thinking, well,

Ejaaz:
maybe if there is a sexier alternative, I'll go use it. I don't care if it's

Ejaaz:
Chinese, it's open source after all.

Ejaaz:
Now, it hasn't escaped me that the irony of China being the open source proponents,

Ejaaz:
the fact that in Xi Jinping's speech over the weekend, he basically said like,

Ejaaz:
hey, we need to be openly collaborating with each other.

Ejaaz:
This can't be a solo kind of like country thing. And we also can't be imposing

Ejaaz:
export restrictions. We've just got to just got to let people build, man.

Ejaaz:
Compare that to like Trump's America or rather, you know, capitalist America,

Ejaaz:
who is supposedly meant to be proposing the same kinds of things,

Ejaaz:
but they're actually like, you know, we might actually end up banning the Chinese

Ejaaz:
open source models. Like, it's just ironic to me.

Ejaaz:
If you're looking at this objectively, the question that you should be asking

Ejaaz:
is, are these models actually good? Like, what are they actually good for?

Ejaaz:
If they're not Fable 5 worthy, like, what can I be using it for?

Ejaaz:
And I think there's a really good example from David Sachs over the weekend here where he goes,

Ejaaz:
Kimi K3 just fixed 15 critical security bugs that Codex and Fable refuse to

Ejaaz:
because of cyber guardrails.

Ejaaz:
And over the weekend, I was using Kimi K3 quite a bit. And I will tell you,

Ejaaz:
the number one feature has got nothing to do with how smart it is,

Ejaaz:
or how long it is, or how cheap it is.

Ejaaz:
It's the fact that I can ask it a question, and it just answers,

Ejaaz:
or I can give it a task, and it just does it. There is no relegation to a lower class model, Kimi K2.

Ejaaz:
It just kind of like does the thing. If I did the same thing for Fable 5,

Ejaaz:
if I did the same thing for GBD 5.6, there is a very high probability that they

Ejaaz:
would just say, sorry, I can't answer that.

Ejaaz:
Or sorry, I'll give you a cheaper, crappier model to do your thing. And it's quite freeing.

Ejaaz:
It's kind of like the feature in itself. Like I don't really care about the

Ejaaz:
benchmarks. It's the fact that I have a near enough really good model that can

Ejaaz:
just do the work. Is it slower? Yes. Does it use more tokens?

Ejaaz:
Yeah. Is it as cheap as I could have hoped?

Ejaaz:
Maybe not, but I don't really care because it's unrestricted.

Ejaaz:
I don't know if that makes sense, but like, yeah, that's my experience.

Josh:
Yeah. And this is the difficult part too. It's because like that wasn't really

Josh:
always the intention either.

Josh:
It's like if they wanted to release this model in the public,

Josh:
the government would not allow it without these safeguards.

Josh:
And they tried and it got banned for almost a month. And that's,

Josh:
that's part of the problem that I think a lot of these labs,

Josh:
and that's kind of what David Sachs is referencing now,

Josh:
is that if you have a frontier model, you are now burdened by the approval process

Josh:
of the U S government before comes out, which will oftentimes include these

Josh:
restrictions that do set things back.

Josh:
And the reality is, is that, I mean, Kimi K3 is basically close to frontier

Josh:
level cyber capability, and it's going to be freely downloaded soon.

Josh:
And if it's not Kimi K3, it will be Kimi K4 in a couple of months.

Josh:
And the reality is, is that while these safeguards are very important to have

Josh:
when they are truly at the frontier, the moment it becomes freely and openly

Josh:
available elsewhere, it loses all the advantage and then therefore puts everyone

Josh:
who is burdened by those safeguards at a disadvantage. And that's this really difficult thing is

Josh:
If you're the AI labs, you want safe intelligence that is aligned with our best human interests.

Josh:
And you also want to offer people the best tools possible.

Josh:
And the US government is saying, well, this is great, but they need to be safe.

Josh:
We need to approve these things.

Josh:
And all the while, this is slowing things down. I mean, how long did it take for us to get GPT 5.6?

Josh:
It was sitting there ready for many, many weeks until they approved it.

Josh:
And during that time, we got Kimmy K3. And there's this really difficult disconnect

Josh:
that's getting hard to wrap my head around.

Josh:
As it relates to the Chinese frontier labs, just kind of burning, scorching the earth.

Josh:
I mean, this was very much Meta's plan when they first were trying to come up

Josh:
in the world of AI, where they were just going to scorch the earth,

Josh:
create the best open source models, distribute it to everybody,

Josh:
and lower the margins of the frontier labs.

Josh:
And the reality is, is that China's just kind of taking that and grabbing it

Josh:
by the horns and running with it.

Josh:
And I'd say doing a pretty good job so far.

Ejaaz:
Yeah. Okay. So something that we have discussed a lot on this show, Josh, is valuations.

Ejaaz:
It's ipos it's generating wealth let's talk is there a bubble or not you just get into it,

Ejaaz:
well okay yeah there's definitely a bubble the question is,

Ejaaz:
is should the bubble be popped and this is a very visceral example that we're

Ejaaz:
showing on the screen right now right so you have opening eyes valuation at

Ejaaz:
the top which is near a trillion dollars

Ejaaz:
and then you have deep seek which is a fraction of that at 71 billion dollars

Ejaaz:
and then moonshot this week who got a valuation upscale to $30 billion.

Ejaaz:
So it's sitting at 30x less the price of OpenAI, despite being near frontier

Ejaaz:
capability of their flagship model, GPT 5.6.

Ejaaz:
Now, we know that there is a ton of frontier American IPOs that are happening

Ejaaz:
by the end of this year. You've got OpenAI, you've got Anthropic,

Ejaaz:
and you've got a few more chip companies as well.

Ejaaz:
And then you've compared that to the Chinese IPO.

Ejaaz:
Aiming for a valuation that is considerably less than that, you've got Moonshot,

Ejaaz:
Kimike2, Kimike3, sorry, doing the same exact thing.

Ejaaz:
And the question is, which one is overpriced or underpriced?

Ejaaz:
Now, my guess, if I had to have a take here, would be that,

Ejaaz:
I think the Chinese frontier labs are going to bring the valuation of these

Ejaaz:
open AIs and anthropics down in the medium term. And what I mean by that is

Ejaaz:
they have proven that you can get frontier capability for a fraction of the cost.

Ejaaz:
But the premium that sits with American frontier labs sits in the research,

Ejaaz:
sits in the talent, and sits in the fact that whoever is closest to building

Ejaaz:
self-improving models will end up capturing quite a bit

Ejaaz:
of future economic valuation that any of these AI models create.

Ejaaz:
And right now, the best bets, if you had to place it on Polymarket or wherever,

Ejaaz:
would be with Anthropic and OpenAI. So it's very important. You can't just look at models right now.

Ejaaz:
That's just a snapshot. You need to be thinking of Fable 6. You need to be thinking of GPT-6.

Ejaaz:
Can those models build themselves and build the next versions of themselves?

Ejaaz:
If the answer is yes, then you could justify some of these valuations.

Ejaaz:
But it is a bit of a leap. It's a bit of a thought boy kind of take,

Ejaaz:
I guess. I don't know. Do you think differently?

Josh:
Yeah, no, it could be true that both OpenAI is overvalued and Moonshot is undervalued.

Josh:
And the reality is, is that they should exist somewhere in between.

Josh:
The big difference, the reason why we see this 28 times multiple on these different

Josh:
companies is because one has a tremendous amount of revenue and a predictable

Josh:
future amount of revenue, and the other does not. We just saw how Kimmy had a huge success.

Josh:
They were unable to satisfy the demand. They had to shut down the signups of

Josh:
new people using their product because they just don't have the GPUs.

Josh:
So there is just not enough compute available to them in order to earn a higher

Josh:
multiple at this moment.

Josh:
They're offering it for free. There isn't predictable revenue drivers on it. It's just not possible.

Josh:
OpenAI, on the other hand, is trading at a very high multiple on its revenue.

Josh:
But the reality is, is that like you mentioned, it is somewhat close.

Josh:
You have to imagine getting closer and closer to this like self-recursive learning

Josh:
loop. And we have no idea what that's going to look like, But we can suspect

Josh:
and we can hypothesize that the totals demand for tokens is going to continue to be up only.

Josh:
Basically forever or for at least a very long time. And should that be the case,

Josh:
there are only a few companies that are able to satisfy that demand,

Josh:
let alone satisfy that demand at a high quality.

Josh:
So it's really this race for GPUs. And it's funny because at the end of the

Josh:
day, the real winner here is Jensen.

Josh:
And I have a feeling this is why he's been so supportive of open source in general,

Josh:
because it just, it requires a tremendous amount of GPUs. it makes AI more accessible to more people.

Josh:
And as other companies begin to make their own custom ASICs or their custom

Josh:
accelerators like Tranium and like the Google TPUs, there is going to be this,

Josh:
again, increasing demand throughout open source communities of the GPUs

Josh:
And I don't know if I'm looking at the market right now, I'm seeing things getting crushed.

Josh:
I'm kind of, I'm kind of bullish. I'm kind of like, wait a second,

Josh:
this is just a discount. None of the market sentiment, or I guess none of the

Josh:
market forces have really shifted in a meaningful way.

Josh:
The only thing that's changed meaningfully is the sentiment because people are

Josh:
a little bit concerned about where China stands.

Josh:
But the reality is to me is that while China has pretty great models that are

Josh:
very efficient, very open source, they're still so far away from the real frontier

Josh:
because the frontier so much more than just intelligence per token.

Josh:
It's the infrastructure.

Josh:
It is the sales teams. It is the business development. It is the reputation.

Josh:
It's the American institutions trusting your product.

Josh:
And so much of that is already baked into OpenAI, into Anthropic,

Josh:
into these large AI labs that it doesn't seem to me like there is a problem.

Josh:
Like, okay, these models are great, but they can't serve them.

Josh:
They aren't going to pass the frontier.

Josh:
And Anthropic and OpenAI, in the meantime, are just going to continue hurling

Josh:
so fast forward with very predictable revenues that are going to,

Josh:
I mean, expect it to go up only.

Josh:
And I think that makes me feel like this is a pretty actually decent buying

Josh:
opportunity and that maybe there is like a little bubble pop,

Josh:
but that happened for 72 hours and now we're back on our way.

Josh:
It seems to be like the market has become very resilient. And even though it's

Josh:
short-sighted, there is this kind of weighing machine over a long period of

Josh:
time that will work itself out to continue to guide upward, I think is the idea.

Ejaaz:
Yeah, I feel the same. When I look at valuations, when I see how volatile the

Ejaaz:
stock market is, I do think it is based on a lot of people's emotions.

Ejaaz:
But the fact of the matter is, whether you end up with a frontier model that

Ejaaz:
costs a lot of money, or if you end up with an alternative model that costs

Ejaaz:
a fraction of that, people are going to use the thing.

Ejaaz:
People who want frontier intelligence and can't afford the Kimi K3 intelligence

Ejaaz:
deficit will end up using Fable five and paying for the extra cost because they

Ejaaz:
get so much more, they make so much more money or they create so much more output on the back end.

Ejaaz:
The people who are hobbyists, who are young founders and startups who can't

Ejaaz:
afford the expensive models will use Kimi K3.

Ejaaz:
It'll take longer, but they'll end up building amazing things.

Ejaaz:
And Jevin's paradox will play out at the end of the day.

Ejaaz:
People will want more tokens. They'll want to consume as much AI compute as

Ejaaz:
they can for various different use cases. The winners at the end of the day

Ejaaz:
are you who are listening to this. The winners at the end of the day are the

Ejaaz:
businesses who want to use AI to accelerate their own purposes.

Ejaaz:
And I think that if you're looking at where, you know,

Ejaaz:
parking your money might make sense, again, like not investment advice,

Ejaaz:
it would be kind of like at the bottom of the stack, the people that are creating

Ejaaz:
the infrastructure, the people that are helping serve these tokens,

Ejaaz:
the people that are helping power these GPUs, the people that are creating the

Ejaaz:
memory to remember all the context that all these different models are going to create about you.

Ejaaz:
The fact of the matter is, if you look at Trump, you look at his speeches and

Ejaaz:
the policies that he's making. If you look at Xi Jinping, these guys are adversaries.

Ejaaz:
He's got the opposite kind of take. The ultimate unifying thread is more consumption,

Ejaaz:
more demand for more AI, more GPUs, more infrastructure. And that is technically.

Ejaaz:
The sector or the companies that are going to end up winning.

Ejaaz:
The most important Kimi announcement over the weekend is this one.

Ejaaz:
Kimi K3 has received far more love than we expected and our GPUs are feeling

Ejaaz:
it. They've stopped signing members up because they've run out of GPUs.

Ejaaz:
Now, whether they're using Huawei's GPUs, which was announced at the same conference

Ejaaz:
that Xi Jinping had a speech at, or whether they're using NVIDIA GPUs, the point is,

Ejaaz:
infrastructure is the moat and that's where capital is headed so whether memory

Ejaaz:
stocks are down whether these gpu stocks are down i think in the long term i'm

Ejaaz:
i'm pretty bullish and i know i'm pretty bullish relatively on this show but.

Josh:
I think we both are

Ejaaz:
Please prove me wrong like i'm i want to see the counter thesis.

Josh:
Yeah well listen it's been correct so far because i mean since the conception

Josh:
of the show we have essentially been up only and the market forces continue

Josh:
to point that way you know it's like there there is somewhat of a case to be made that perhaps the

Josh:
there being just two AI labs isn't going to work out great for everyone else.

Josh:
But the people who it works out for, like you mentioned, is the people who are

Josh:
providing the infrastructure to build this out.

Josh:
Because even in the case, let's say Kimi K4 is a true frontier model,

Josh:
they're still going to need a huge amount of compute and all the other labs

Josh:
are going to need a tremendous amount of compute to keep up.

Josh:
And the thing with this competition is, like, so long as the demand is there,

Josh:
the amount of resources required to supply that demand is just going to continue to be up only.

Josh:
And regardless of these outcomes, regardless of the open source starting to

Josh:
ship away at closed source or closed source maintaining its moat and just shooting

Josh:
ahead through the self-recursive learning, both of those realities require

Josh:
so much more compute, both to serve the larger models and both to keep up with this increased demand.

Josh:
Clearly, China can't do that. So I'd say safe from disaster.

Josh:
Once again, we've survived our second deep seek moment, perhaps.

Josh:
It only took us 48 hours to kind of rebound and get back to it.

Josh:
But we'll see what comes next. I mean, there are rumors, EJs,

Josh:
and I don't want to speculate, but I have heard that Ilya is beginning to wake

Josh:
up and has been receiving some pressure from investors to share what they've been working on.

Josh:
Ilya Sitskever, yes, Safe Super Intelligence, that guy, co-founder of OpenAI,

Josh:
he's been working quietly for how many years now?

Josh:
And I'm seeing on X all the time. It's like, hey, the investors at this company

Josh:
are kind of like getting a little restless.

Josh:
They know what's going on, but the world doesn't know and they want to get that bag secured.

Josh:
So I'm exceptionally excited for announcements like that, where perhaps there will be this huge sort of

Josh:
Improvement in efficiency or algorithmic improvement or something new and novel

Josh:
that can really push things forward in a big way so we are we are always a single

Josh:
breakthrough away from this catastrophic

Josh:
event either a catastrophic up or down we don't know but for now

Josh:
safe from explosion of the bubble for now and again like i mean china's just

Josh:
on their way and they're going to continue to keep firing with no regard for ip

Josh:
or any any sort of american laws and i think that's kind of where we could leave

Josh:
it is like hey kimmy k3 is a great model um you can't use it right now because

Josh:
it's a little too good um but it's a great model nonetheless and and the american

Josh:
markets felt it and hopefully it's um

Josh:
it keeps everyone on their toes

Josh:
moving forward very fast when it comes to iterating through these models

Ejaaz:
Yeah that's pretty much it i think if if there was a single sentence that I

Ejaaz:
would want to leave you folks with is we can't keep ignoring China.

Ejaaz:
Like those days are gone. They are here to play in a very meaningful way.

Ejaaz:
And they're leading the open source frontier, which means that,

Ejaaz:
you know, you can own your AI at home. These, the cost of hardware is going

Ejaaz:
to get a lot cheaper and you'll be able to have the privacy access and the cheap

Ejaaz:
efficiency costs that comes with that.

Ejaaz:
So keep an eye on the pulse, on the radar. If you can't do that,

Ejaaz:
if you're not on X the entire time, hey, we've got this really fun podcast called

Ejaaz:
Lemon Rhapsody. Subscribe to us.

Ejaaz:
We do four episodes a week. We post twice on a newsletter to hundreds of thousands

Ejaaz:
of folks to cover anything and everything that is happening at the frontier of AI and technology.

Ejaaz:
So if you want to keep up to date, make sure you subscribe to us.

Ejaaz:
Leave us a comment if you disagree with anything that was said today.

Ejaaz:
Or if you agree, we'd love to hear from our fans as well.

Ejaaz:
We're always looking for where we might be wrong or different investment angles

Ejaaz:
and stuff like that. So please let us know in the comments.

Ejaaz:
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Ejaaz:
leave us a comment. It helps us out massively. And I think the final note I

Ejaaz:
will say is Limitless has officially spun out. We are on our own.

Ejaaz:
We're keeping the lights on at home ourselves.

Ejaaz:
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Ejaaz:
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Ejaaz:
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Ejaaz:
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Ejaaz:
And I think that's it, Josh. Anything else?

Josh:
That was pretty good. Dude, you got the outro dialed now. I think that covers

Josh:
just about everything and then some.

Josh:
Clearly we've been doing this for a lot. This is what, episode 210 now?

Josh:
So yeah, if you've made it this far, you know the deal. Thank you guys so much

Josh:
for watching and we'll see you in the next one.