By Eric Peters, CIO of One River Asset Management
“DeepSeek-R1 is AI’s Sputnik moment,” posted Marc Andreesen on X, talking his book as all great investors do.
Nothing could be better for the venture tech business than an existential race for AI supremacy. But given the whole world’s fascination with AI, will DeepSeek represent a broader Sputnik moment for America?
It’s important of course, because competition lifts us all. The higher the stakes, the more determined and creative our efforts. Profits tend to compound alongside our advances, and so it is that the S&P 500 index which launched in 1957, months before the Soviet Union hurled Sputnik into orbit, has rallied 91,411% (including dividends) through 2024 (that’s a +10.6% average annual return, +6.7% real).
But such financial returns pale in comparison to our engineering accomplishments. Since Sputnik ignited the American drive to dominate all rivals, our scientists have invented supercomputers that are 100 trillion times faster than the 1957 state of the art IBM 704.
Back then, Khruschev wanted to import American technology and equipment, but the US restricted such transfers. Soviet exports to the US in 1957 were $16.8mm/yr, imports were $4.5mm. That’s what that Cold War looked like.
What might today’s eventually look like? The Australian Strategic Policy Institute published a 2024 paper covering 64 critical technologies across sectors, including defense, space, energy, artificial intelligence, robotics, cyber computing, biotechnology, advanced materials, and quantum technologies.
From 2003 to 2007, the US led the world in 60 out of 64 critical technologies. However, from 2019 to 2023, China leads in 57 out of 64 technologies, while the US now leads in only 7.
China’s most recent gains have occurred in quantum sensors, high-performance computing, gravitational sensors, and advanced semiconductor chip making.
The US now has a truly formidable competitor. It should be a terrifying prospect for lazy Americans. And a wakeup call for all exceptionalists.
The most exciting and high-stakes race in all human history is now well underway.
And the question of our day, is will Americans again rise to the moment?