Prominent venture capitalist Joe Lonsdale believes the government, not overexuberant investors, poses an existential threat to the American AI boom.
Speaking at the 2025 Reagan National Defense Forum, the Palantir co-founder says AI is rooted in real and compounding productivity gains that are already reshaping the US services sector at a massive scale.
Lonsdale says the data indicate that an AI bubble should not be the top concern.
“The thing I wouldn’t question is in America, you have $5 trillion of wages in our services economy, and over $2 trillion of those, over 40% of those, are in areas where we’ve already shown you can double the productivity in many cases, triple or quadruple the productivity. And so you have hundreds of companies growing very, very quickly that are basically providing services that are apps in the economy, whether you’re in construction, whether you’re in the back-end of logistics and financial back-ends.
And so what this means is you’re actually creating very quickly, already probably hundreds of billions and very soon trillions of dollars of value in these areas. That’s real. That’s not a fake thing.”
He says that even if enthusiasm around core AI models rises and falls, the value created by applied AI in real businesses will keep grinding higher.
“So even though the amount of money going into the core models may ebb and flow, you’re just going to see, I think, monotonically upwards in those areas that are creating real value, which is enough.”
According to Lonsdale, the productivity gains delivered by AI suggest that the industry wouldn’t collapse because it’s a bubble. He warns that bad regulatory policies could strangle the AI boom, leaving the US exposed to adversaries.
“The only way we’re going to have this whole thing implode and damage our national defense would be if we stop all these companies creating productivity from scaling. And then we couldn’t invest any more in the infrastructure at all, because these things would have been stopped. And then it would fall. But it’s not going to fall because it’s a bubble. It’s only going to fall because we screw up the regulation.”
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