Today's Take for July 20, 2026
The story: Another day, another shock to the AI market. On Friday, Chinese startup Moonshot AI revealed Kimi K3, a state-of-the-art model that rivals the likes of Claude and ChatGPT in performance – but, significantly, costs a lot less. Kimi’s ability to do more with less sent shares of key memory chip makers (the current carriers of AI hype) tumbling – ironic, because within 48 hours of going live, Moonshot ran out of computing power and paused new sign-ups. In a total coincidence, Xi Jinping gave a speech that same day positioning China as a world leader in open-source AI development in partnership with developing countries.
Why it matters: There’s a bit of deja-vu here: in January 2025, another Chinese AI model, DeepSeek, also shocked the world with a similarly low-cost, high-output model. China is becoming a leader in these, partially thanks to necessity: US export restrictions limit the amount of computing power available to China's AI developers, and as a result, they've prioritized efficiency over everything else. In North America, OpenAI and Anthropic are looking to go public in the near future, but are already fighting perceptions that their models are overpriced. The emergence of a cheap and powerful competitor hardly helps.
What this means…
- For investors: More reasons to keep an eye on the microchip market. While most semiconductor stocks were affected by the Kimi announcement, microchip stocks could really go up or down. More efficient models mean less demand for data centres, but cheaper models also mean easier adoption, which could cancel out the first part.
- For consumers: A cheap and powerful AI – at least, for anyone who managed to get access before signups were paused. For the rest of us, there’s always whatever open source model next week will bring. But Kimi's models are open-weight, meaning any company, not just Moonshot, can build products on top of them without paying a licensing fee – and it costs way less to run them, remember? Some AI products you use might be about to get cheaper.
- For the American AI giants: Cause for concern, and one that’s already sending some scrambling to mount a counterattack. Over the weekend, OpenAI’s head of strategic futures Dean Ball mused on X that open source AI could lead to “full AI communism” and a “dystopian hellscape.” Ball said the US would be well-advised to create 'regulatory risk' around Chinese AI models; in response, White House AI advisor David Sacks questioned whether Ball was advocating for regulatory capture (and also insulted Ball's IQ). Ball later walked back his statements, saying he wasn’t proposing “ill-justified soft-law discouragement of Chinese AI.”
Bottom line: This is a significant riposte from China in the AI game, and one that appears to have hit its mark. OpenAI and Anthropic have leaned heavily on the pay-to-play token model, but open-source at-scale could allow China to compete with its North American counterparts. One of Ball’s more telling gripes about open-source models like Kimi was that they discourage capital expenditure, i.e. they make it harder to justify all of the billions (trillions, even) spent on AI investment. A potential OpenAI IPO is at the back of everyone's minds.
Inflation slows in Canada (...or does it?)
Everyone's asking: Is inflation cooling in Canada?
The better question: Did gasoline just have a good month?
Why it matters: Stats Canada released inflation data for June today, showing Canada's inflation rate has decreased to 2.8%. That's way better than May's 29-month high of 3.2%, and economists had predicted 2.9% for June, so a small 'yay!' for beating expectations. But don't get too excited, because gasoline's responsible for most of it – its cost dropped 10% from May to June, which brought the YoY inflation for gas from 33.2% to 20.5%. (Don't worry, you're not taking crazy pills – gas prices increased again in July, but the official numbers aren't out yet because… it's still July.) If you remove gas from the equation, CPI stayed exactly the same at 2.2%, and next month could be a whole new story. Enjoy the slightly better numbers while you can.
The Number
$700 million
How much new investment Ford (read: cars, not politics) will put into maximizing production at the Essex Engine Plant in Windsor, Ont. That's part of the new three-year deal that Ford workers ratified on Sunday, which 74% of hourly workers and nearly all salaried workers supported. The investment is part of an overall $1.25 billion that Ford will put into Canadian manufacturing. Unifor members will also see a 9% wage increase over the next three years. The deal doesn't include anything about EVs – Ford had previously planned to build EVs at its Oakville facilities but scrapped the idea in 2024. This new deal gives Ford workers three more years of certainty (a lot more than most can say).
