American Hubris: The AI Bubble that Popped
At President Donald Trump’s inauguration, the tech bros of Amazon, X, Facebook, TikTok, and OpenAI all joined in a $500 billion rallying cry to build god-tier artificial intelligence (called “AGI”, or artificial general intelligence). But a Chinese app running from someone’s backyard, using dated hardware, just popped the American dream of AI supremacy.
Called DeepSeek, the Chinese ChatGPT-killer made Silicon Valley look especially unintelligent. Americans were betting on “bigger is better”, whereas the Chinese team was able to achieve similar and better results using a much, much smaller technology footprint.
As a result, yesterday, the US stock markets lost over a $trillion in value. All due to the release of a Chinese AI chatbot. That’s because the AI bubble popping implies a reduced global demand for NVIDIA’s graphical processors, reduced demand for ASML’s computer chip machines, and a reduced demand for cheap energy (oil and gas).
In fact, the implication extends to the geopolitical: The AI bubble popping means Donald Trump may no longer need to annex Greenland and Canada for their oil and gas resources after all!
The Chinese “low-tech” supremacy implies future Chinese supremacy on the military battlefields around the world as well. If Americans, using the best of the best, and the brightest of the brightest, couldn’t outsmart Chinese developers, the world will be asking, “What else can’t the USA do?”
China was able to defeat the USA’s top AI companies while keeping its society relatively homogenous. China doesn’t rely on Indian immigrants, nor on cheap Mexican labor, nor on the military domination of hundreds of nations around the world, nor on the maintenance of over 800 military bases overseas (unlike the USA).
The AI Bubble popping, then, also deals a blow to the thinking behind inclusion and diversity. Apparently, a hyper-multi-racial “open society” does not necessarily lead to technological superiority.
All of a sudden, superpowers don’t need immigration and diversity to be a superpower. What they needed was intelligence. This, I think, is the difference between the USA and China. In China, they put their smartest people in charge of politics and economics. In the USA, they put their most delusional people in charge.
For now, DeepSeek has showed the world you can create “god-level artificial intelligence” without the need for building datacenters the size of Manhattan Island (as announced by Mark Zuckerberg of Facebook):
If “building big” was supposed to save the US economy, then Americans have finally caught up with their hubris.