Gene Munster Says US Government Likely To Block Top AI Firms From Foreign Funding Over National Security, Calls AI 'The Next Arms Race'

Deepwater Asset Management‘s managing partner Gene Munster has raised a red flag over the potential impact of Saudi Arabia’s $40 billion AI investment on the U.S. market.

What Happened: On Tuesday, Munster took to X, formerly Twitter, to express his concerns about the Saudi investment. He pointed out that while the investment could be a significant opportunity for private AI companies in the U.S., it could also trigger a national security response from the government.

“At the surface this looks like a juicy pool of capital for private AI companies in the US (even though the Saudi’s will be investing globally),” he said, adding, “There’s a catch: AI is the next arms race.”

Munster then highlighted the role of the Committee on Foreign Investment in the United States or CFIUS, which could potentially block the best private AI companies in the U.S. from accepting foreign investments on national security grounds.

Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox.

Saudi Arabia Plans $40 Billion Push Into Artificial Intelligence (NY Times).

At the surface this looks like a juicy pool of capital for private AI companies in the US (even though the Saudi's will be investing globally).

There's a catch: AI is the next arms race.

Meet the…

— Gene Munster (@munster_gene) March 19, 2024

The Saudi government’s plan to create a $40 billion AI investment fund was reported by The New York Times on Tuesday. The fund, to be managed by Saudi Arabia’s Public Investment Fund or PIF, is expected to be a global investment initiative, with discussions already underway with U.S. venture capital firm Andreessen Horowitz and other financiers.

Munster’s concerns about this investment’s potential national security implications are not unfounded. The U.S. government has a history of blocking foreign investments in critical sectors on national security grounds.

For example, in 2017, the U.S. President blocked the acquisition of Lattice Semiconductor by a Chinese-backed investment group following a recommendation from CFIUS.

PIF, guided by Crown Prince Mohammed Bin Salman (MBS), is the 5th largest Sovereign Wealth Fund in the world, with $926 billion in assets (SWFI). The middle eastern country has reportedly decided to prioritize investing in AI as the quickest way it to innovate, create jobs, and boost competitiveness.

Check out more of Benzinga's Consumer Tech coverage by following this link.

Read Next: Gene Munster Echoes Trump On TikTok Ban: ‘Small Amount Of Good News’ For Zuckerberg’s Meta

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

Photo by Pixels Hunter on Shutterstock