Russian 27th seed Khachanov triumphed 7-5, 4-6, 7-5, 6-7 (3/7), 6-4 over the Wimbledon runner-up to make the last four at a major for the first time.
"I'm obviously devastated. But all credit to Karen. He's a fighter. He's a warrior," said Kyrgios, who had knocked out defending champion and world number one Daniil Medvedev in the last-16.
"I'm just devastated. Just feel like it was either winning it all or nothing at all, to be honest.
"I feel like I've just failed at this event right now. That's what it feels like."
Kyrgios is scheduled to play in Tokyo at the start of October but he admitted he was finding it hard to summon enthusiasm to return to the grind of the tour.
"Honestly I don't even really care about any other tournament. Like, I feel like at the Grand Slams, now having success at a Grand Slam, it's just like no other tournament really matters," he added.
"I think pretty much every other tournament during the year is a waste of time really. You should just run up and show up at a Grand Slam. That's what you're remembered by."
Before Tuesday, Kyrgios had the most wins -- 26 -- since the start of the grass court season going back to June than any other player.
He was seen as one of the title favorites in New York after the fourth round defeat of four-time champion Rafael Nadal and the absence of Novak Djokovic who beat him in the Wimbledon final.
"It's just devastating. Like, it's heartbreaking. Not just for me, but for everyone that I know that wants me to win," he said.
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