SpaceX shares have fallen sharply, closing below $120 after suffering seven straight sessions of declines. This marks a drop of over 11% from its IPO price of $135 and nearly 47% from a post-IPO high of $225.64. The stock has lost more than $1 trillion in market value, intensifying concerns about the sustainability of high AI-related equity valuations. Meanwhile, Moonshot AI’s launch of its affordable Kimi K3 model has disrupted expectations around pricing power within the AI hardware and software space.

SpaceX’s Decline Signals Deeper Doubts

The recent slump in SpaceX’s stock goes beyond general market corrections. Delays in critical operational milestones such as the Starship test and a Falcon 9 launch failure have increased perceived execution risks. Starship plays a key role in SpaceX’s satellite deployment and broader space infrastructure strategy, making these setbacks particularly impactful for investors.

Peter Schiff, a well-known economist and bitcoin skeptic, argued that the fall in AI-linked stocks is more than a temporary pullback, suggesting the AI stock bubble has already burst. His view is reinforced by the scale and speed of SpaceX’s decline and the emergence of cost-effective competition like China’s Kimi K3. However, institutional investors like ARK Invest purchasing over $18 million in SpaceX shares during this downturn indicate some still see value at reduced prices rather than signaling an outright collapse.

Kimi K3’s Low-Cost Competition Challenges Premium Valuations

The launch of Moonshot AI’s Kimi K3 model has introduced new dynamics to the AI market. By delivering competitive AI performance at far lower cost, it challenges U.S. companies that have justified premium valuations on expected high returns from expensive infrastructure investments. The demand for Kimi K3 was strong enough to prompt Moonshot to pause new subscriptions, showing market interest extends beyond mere marketing hype.

This development highlights a shifting battleground where price-to-performance ratios could become decisive, potentially compressing margins for AI infrastructure providers. Academic studies published in June also emphasize how cost-efficiency will shape AI adoption and related investment returns.

Upcoming events like SpaceX’s earnings report, further Starship testing, and the unlocking of post-IPO shares may clarify whether the current selling pressure will stabilize or worsen.

This material is informational and does not constitute financial advice.