News

US science is facing a historic turning point: massive budget cuts, institutional interventions and a growing brain drain are threatening the innovation base of a superpower – and, with it, the superpower itself. “This has global consequences that investors should prepare for,” explains Thorsten Fischer, Managing Director and Head of Portfolio Management at Moventum AM.

The United States is currently experiencing a major shock to its scientific system. The government has proposed halving the budget of the National Science Foundation (NSF). In parallel, more than 1,600 ongoing research projects have been abruptly terminated since April 2025. This has been accompanied by institutional interventions: the members of the National Science Board were dismissed, and the NSF Director stepped down early. Within the research community, people are speaking of “chaos”.

However, the true extent of this development is not reflected in the current cuts, but in the innovations that will fail to materialise in the future. “Technologies, industries and companies that never come into being do not appear in any statistics – yet they remain the greatest loss,” Fischer explains.

When the state withdraws from research, it leaves a huge gap. A look at history shows why: the technological dominance of the United States is rooted in publicly funded basic research. The internet, GPS, cloud computing and artificial intelligence did not emerge from short-term return expectations, but from the long-term strategic promotion of research. “Private capital markets are structurally barely able to take on this role,” says Fischer. “The risks are high, the time horizons long and the visibility of future returns limited.” There is a particular irony here: even the military superiority of the United States, so valued by the US President, has historically been based on civilian basic research.

Science is not only being subjected to cuts; its increasing politicisation is particularly critical. “With the dismissal of the National Science Board, institutional independence is coming under pressure – a key prerequisite for long-term innovative capacity,” says Fischer. At the same time, the US is losing its appeal for leading international researchers. Political pressure on universities, more restrictive immigration rules and rising research investment in Europe and Asia are causing global talent flows to realign.

The strategic conflict is therefore shifting: it is no longer only about technological competition between the US and China, but about the contrast between open innovation systems and politicised scientific structures.

What does this mean for investors? “The loss of technological leadership rarely happens abruptly,” Fischer explains. It begins gradually – with less research, fewer talents and fewer breakthroughs. “This erosion may already have begun.” For investors, a new factor is therefore becoming increasingly important: technological innovative capacity as a geopolitical asset. Competition for talent, research capacity and AI infrastructure is likely to intensify further. Europe and Asia could benefit selectively from a relative weakening of the US.

For the first time in decades, the US is therefore putting its greatest strategic advantage at risk. “Because even in the 21st century, geopolitical power is not created by capital or military strength alone,” says Fischer, “but by the ability to produce the technologies of the next decade.”