America’s Cosmic Bet on AI

The United States Is Betting the House on Winning the Artificial Intelligence Race With China

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Essay:

America’s Cosmic Bet on AI

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Essay

America’s Cosmic Bet on AI

The winner takes it all. What happens if the United States loses?

August 4, 2026, 9:50 AM

By **Graham Allison**, a professor of government at the Harvard Kennedy School.

!A pile of green computer semiconductor chips sits on a felt gambling table surface, surrounded by stacked poker chips.

*A pile of green computer semiconductor chips sits on a felt gambling table surface, surrounded by stacked poker chips.*

Lori Kelley illustration/Foreign Policy; iStock images

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The United States is betting the house on winning the artificial intelligence race with China.

Consider the U.S. economy, which is increasingly becoming a highly leveraged bet on the promise of this new technology. AI is the primary driver of investments, stock market gains, and growth in the United States. As The Wall Street Journal recently noted, AI-related investment is driving most of the growth in U.S. GDP. Spending on AI data centers accounts for half of all business investment in the country. AI companies made up more than 40 percent of the value of U.S. equity markets *before*SpaceX went public in June. If OpenAI and Anthropic follow suit later this summer with expected trillion-dollar-plus IPOs, AI companies will account for more than half of the value of the stock market. Indeed, of all the S&P 500’s gains in 2026, 85 percent have come from AI companies.

The United States is betting the house on winning the artificial intelligence race with China.

Consider the U.S. economy, which is increasingly becoming a highly leveraged bet on the promise of this new technology. AI is the primary driver of investments, stock market gains, and growth in the United States. As The Wall Street Journal recently noted, AI-related investment is driving most of the growth in U.S. GDP. Spending on AI data centers accounts for half of all business investment in the country. AI companies made up more than 40 percent of the value of U.S. equity markets *before*SpaceX went public in June. If OpenAI and Anthropic follow suit later this summer with expected trillion-dollar-plus IPOs, AI companies will account for more than half of the value of the stock market. Indeed, of all the S&P 500’s gains in 2026, 85 percent have come from AI companies.

Or consider the growing national security-AI industrial complex. The U.S. government is becoming a major customer of leading AI companies, deepening entanglements with the Defense Department, CIA, National Security Agency, and others. An odd alliance that includes U.S. President Donald Trump, socialist independent Sen. Bernie Sanders, and OpenAI CEO Sam Altman is seeking ways for the U.S. government to become a major stakeholder of these companies.

As David Sacks, who recently stepped down from his position as the Trump administration’s AI czar, pointed out in late July, the United States’ champions—OpenAI and Anthropic—are now resorting to a “regulatory capture strategy” focused on persuading the U.S. government to adopt regulations and laws that will handicap their competition, both foreign and domestic.

Three powerful forces are fueling this race for the brightest shiny object that current observers have ever seen.

First, AI companies are chasing what they believe will be the biggest-ever pot of gold at the end of the rainbow. For the first time in history, companies and individuals are talking not in billions but trillions. Their leaders stand to gain not only heretofore unimagined fortunes but also fame and influence. Note, for example, the June G-7 meeting in France, at which AI CEOs took seats around the same table as leaders of the world’s advanced economies to discuss the road ahead. Is there anything they would not say or do to win?

Second, U.S. Treasury Secretary Scott Bessent and other economic policymakers are acutely aware of the huge systemic risk posed by the nation’s unsustainable annual fiscal deficits (now at nearly 6 percent of GDP) and government debt (the annual interest payments on which now exceed the defense budget). An AI miracle that produces unprecedented increases in productivity and growth offers their best hope for avoiding an economic catastrophe.

Finally, the national security strategist community has declared that AI is existential, in that whoever wins the AI race will rule the world. They have accepted the technology titans’ proposition that whichever nation is first to build a super-intelligent “AGI,” artificial general intelligence, will have a decisive, irreversible advantage—since an agent smarter than all the Nobel laureates in the world will then begin teaching itself. In former U.S. Secretary of State Condoleezza Rice’s summary: This is a race that “we absolutely have to win.”

*An illustration shows semiconductor chips structured like a house of cards with a tiny city with government buildings atop it, ready to topple.*

ArgumentAs an AI Scholar, I Am Now Putting a High Probability on an AI Doomsday This article has an audio recording

What happens when the house of cards collapses?

*By Bhaskar Chakravorti*

Confronting this blizzard of claims and counterclaims about a bedazzling technology, four questions demand our attention.

First, is the course that the United States has chosen prudent? Another way to think about this is, would a financial investor with fiduciary responsibility place this large a bet on a single sector? Second, what could go wrong? Could the eye-popping increases in investment and stock prices be another bubble—analogous to the financial wiza