Genesis Mission: National security strategy or economic rescue for AI?

US President Donald Trump launched “Mission Genesis” via an executive order issued yesterday, directing the Department of Energy and all scientific institutions to accelerate the artificial intelligence (AI) race.

The executive order argues that since the founding of the US, scientific discoveries and technological innovations have “ensured America’s progress and prosperity.” It further states, “Today, America is in a race for global technological dominance in the field of artificial intelligence (AI) development, a key frontier of scientific discovery and economic growth.”

Citing the need for a “historic national effort comparable to the urgency and ambitious goals of the Manhattan Project,” Trump tasked the Department of Energy with leading an initiative that brings together “federal laboratories and industry partners.”

The order states:

“Within 90 days of the date of this order, the Secretary shall identify federal computing, storage, and networking resources that can be used to support the mission. These resources include cloud-based high-performance computing systems located at DOE [Department of Energy] facilities and resources available through industry partners. The Secretary shall also identify additional partnerships or infrastructure upgrades that could support the Platform’s computing infrastructure.”

Some observers believe this order signifies a federal government “bailout” of AI investments and companies, which have become the driving force of the American economy.

For instance, the Moon of Alabama (MoA) blog highlights the shifting stance of Trump’s “AI and crypto czar,” David Sacks, over the span of just a few weeks. In early November, Sacks stated, “There will be no federal bailout for AI. There are at least 5 major frontier model companies in the US. If one fails, others will take its place.” However, two days ago, while sharing a pessimistic AI report from The Wall Street Journal (WSJ), he wrote, “According to today’s WSJ, AI-related investments account for half of GDP growth. A reversal of this brings recession risk. We cannot afford to go back.”

On the other hand, Sacks reverted on Tuesday to his thesis opposing any bailout package for companies in the artificial intelligence sector.

Referencing the WSJ article he shared, Sacks stated, “I understand the confusion of those who might interpret this post as supporting a bailout. I have already opposed this. Furthermore, I do not believe such a thing is needed.”

However, the relevant WSJ report draws attention to the risks accompanying the American economy’s dependence on artificial intelligence:

“Stock price-to-earnings ratios are near record levels. If high profit estimates prove incorrect, stock prices could fall, and investments could slow down. Although the S&P 500 recorded a 1% increase on Friday, it fell approximately 2% last week due to bubble concerns.

(…)

Falling stocks could create a reverse wealth effect: Americans consume less, which lowers sales, profits, and potentially employment.”

Moreover, another WSJ report published a few weeks ago suggested that American taxpayers might have already begun bailing out AI companies.

The report notes that while the market gives “moderate” signals, the White House is treating this sector as if it were “too big to fail.”

The Wall Street Journal emphasized that while players in the AI industry argue a “correction” akin to the 2008 crisis is not imminent, the federal government has “already started to save” the AI sector through regulatory changes and public funds designed to protect companies should the private sector withdraw.

A frank statement on this matter had already come from OpenAI’s Chief Financial Officer, Sarah Friar. At an event hosted by The Wall Street Journal, Friar stated that the company had approached governments to “backstop” loans for AI chip purchases with a “guarantee” that would attract private financing.

The Wall Street Journal wrote:

“By presenting US leadership in AI as a goal on which American national security and economic growth depend, Friar removed the main concern making investors hesitate: Is developing AI on such a large scale worth the financial risk?”

Although Friar later walked back her comments, the genie is out of the bottle. Performance pressure for these companies is becoming unprecedented, and evidence suggests they may not succeed. An MIT study conducted this summer revealed that 95% of approximately 300 organizations purchasing or developing their own generative AI (GenAI) tools obtained zero return on their investments.

According to Census Bureau surveys, AI adoption in large companies has decreased. Some observers have also drawn attention to a situation resembling “circular deal-making,” a characteristic feature of the collapse in the telecom sector.

Nvidia is investing $100 billion in OpenAI, which plans to purchase millions of Nvidia chips. This type of financing cycle can become dangerous when the market cools.

On the other hand, MoA underscores another dimension of the “bailout package” by highlighting the move to centralize AI activities within the executive order.

The executive order states that Genesis will “act as a bridge between government computing models and private sector models” and “allow Washington to influence which companies will be in the leading position and which capabilities will be prioritized.”

The order notes, “It will accelerate real scientific breakthroughs, but at the same time quietly determine the rules of the AI race, who will participate, who will provide access, and how the most powerful systems will be directed.” Consequently, the thesis of “private sector-led investment” appears to have taken a significant hit.

MoA argues that by allowing the bailout of overextended AI companies through massive federal spending, Trump is also attempting to prevent a stock market crash that could cause Republicans to lose their majority in the House of Representatives.