A new 'Sputnik Moment' for a new Cold War
Begun, the AI wars have.
In early October 1957, Americans across the country woke up to newspaper headlines announcing an incredible revelation: the Soviet Union had successfully launched the world’s first artificial satellite.
The news shocked average citizens and expert analysts alike. The fact that the USSR had beaten the U.S. in a critical technological development confirmed the worst suspicions of many Cold Warriors: that the U.S. had lost its technological edge. But the impact went beyond the halls of Washington, Sputnik took a toll on the morale of the American public which was still riding the high following World War II.
The response from the Eisenhower and subsequent presidential administrations was sweeping. Many credit the “Sputnik moment” for sparking major investment in technological innovation which kicked off the U.S.-Soviet space race. While the U.S. would ultimately surpass Soviet technology, it took 14 years and a massive national investment for Americans to recover from Sputnik by putting a man on the moon.
Today we have a new Sputnik moment for a new Cold War, this time in the field of artificial intelligence. This was the warning tech entrepreneur Marc Andreesen gave in a post on X shortly after Chinese AI company Deepseek published its R1 model open-source. As a result, Deepseek’s free to download app surged to the top of app store charts practically overnight.
Like Sputnik did in ‘57, Deepseek has shocked both experts and the general public. The prevailing assumption in the AI space was that only a handful of American companies had the financial backing and technological capability to own the AI space. It was practically a foregone conclusion that OpenAI’s ChatGPT, Google’s Gemini, Amazon-backed Claude or another American made AI model would be crowned the victor and collect billions in profits by monetizing their closed-source models. Deepseek’s ability to not only compete, but potentially surpass these tech giants with a fraction of the computing power and a shoestring budget has flipped the AI industry’s conventional wisdom on its head.
For investors, it means the bets they made on the American tech giants might not pay off. As was the case with Sputnik, Deepseek calls into question America’s technolgical edge. Conventional wisdom amongst American industrialists and policymakers has always been that while China is very good at copying American manufacturers, they can’t innovate the way we do. While China chipped away at U.S. manufacturing over the last 30 years, we were assured that they can only produce a facsimile of our products. Surely the next Google or iPhone won’t come from China!
This was a fair assumption, for a time. China’s reputation as a copy-paste nation is well earned due to its rampant intellectual property theft and mass production of cheap, low quality goods. Even today, China is more closely associated with drop-shipping knock offs on Temu than producing anything particularly novel.
But Chinese policymakers realized long ago that simply reproducing American designed goods was not a viable long term strategy for economic growth. This is why the Chinese Communist Party launched initiatives like Made in China 2025 and the Thousand Talents Program in an effort to bolster domestic innovation. The former sought to make China the world leader in high tech manufacturing through subsidies and intellectual property acquisition. The latter aimed to encourage successful Chinese entrepreneuers, researchers, and professionals living abroad to bring their talents home. Deepseek may be the first success story resulting from these policies.
Like Sputnik, the impact of Deepseek’s arrival goes beyond just technological bragging rights, it poses a threat to U.S. national interests. AI is expected to revolutionize everything from our work productivity to medical breakthroughs. Whoever can provide the best AI product for the cheapest price has the potential to become the backbone of the global economy. In turn, whoever owns that product will not only stand to reap billions in profits, but also the ability to control how we communicate and perhaps even write history as they see fit. If you want an example of what that would look like in the CCP’s hands, just try asking Deepseek about the Tiananmen square massacre of 1989. Given China’s orwellian track record on social media, I’m not inclined to see them in charge of the most important piece of technology created since the internet.
Winning the AI wars, however, will require a national effort that eclipses the space race Sputnik set in motion more than a half century ago. The Trump administration’s recent unveiling of the Stargate Project, a joint venture aiming to invest $500B in American AI infrastructure, is a good start. But that’s just scratching the surface. AI development will require immense computing power, which will require a secure computer chip supply chain. These computers require immense amounts of power, which means the Trump administration will have to unleash domestic energy and invest in nuclear generation to meet demand. We will also need to train the next generation of AI innovators and engineers by providing elite STEM education. While we are at it, we may also want to reconsider whether our not it is in the national interest to continue educating China’s next generation of tech leaders only to have them apply their knowledge to the goals of the CCP.
Make no mistake, the AI wars have begun and the U.S. may very well be losing. If Deepseek is the 21st century Sputnik moment, will we do what we must to prevail or is this a space race we won’t win?