BOSTON, Massachusetts — After the release of DeepSeek-R1 on Jan. 20 triggered a massive drop in chipmaker Nvidia's share price and sharp declines in various other tech companies' valuations, some declared this a 'Sputnik moment' in the United States-China race for supremacy in artificial intelligence (AI). While America's AI industry arguably needed shaking up, the episode raises some difficult questions.

The US tech industry's investments in AI have been massive, with Goldman Sachs estimating that 'mega tech firms, corporations and utilities are set to spend around $1 trillion on capital expenditures in the coming years to support AI.' Yet, for a long time, many observers, including me, have questioned the direction of AI investment and development in the US.