The tech sector has been popping off this year, particularly in the realm of artificial intelligence. With President Trump’s AI Action Plan emphasizing unfettered growth, the American AI industry has witnessed more advanced AI models, an unprecedented spending frenzy and an increasingly complicated relationship between the United States and China — and that’s only a fraction of what happened in 2025.
What Events Defined the Tech Sector in 2025?
DeepSeek’s disruption of the artificial intelligence landscape, OpenAI’s restructuring into a public benefit corporation and Google’s antitrust case are a few moments that came to define the tech sector in 2025. Given Trump’s push to roll back tech regulations, the industry could be primed for even more chaos in 2026.
Struggling to keep track of what’s happened over the past 12 months? Don’t worry, we’ve got you covered. Here’s a recap of some of the tech sector’s top stories and trends from this past year, where things currently stand and what 2026 could hold in store as AI takes center stage during the midterm elections.
DeepSeek Reignites the U.S.-China Rivalry
DeepSeek, a Chinese AI startup, took the world by storm when it released DeepSeek-R1 — an AI model that rivaled the performance of those created by larger tech companies at a mere fraction of the cost. R1 sent U.S. tech stocks tumbling less than a week after its arrival, irking Trump and America’s tech elite alike.
Recognizing the need for more infrastructure to develop more powerful models, tech leaders have since poured billions into expanding American data centers and other AI infrastructure. Trump helped spearhead these efforts by launching the Stargate Project, which dedicates $500 billion over the next four years to building data centers in the United States. OpenAI, Nvidia and Microsoft are just a few notable names backing the project.
But the rising number of data centers in the U.S. has also strained natural resources and driven up energy bills, threatening the initiative’s long-term sustainability. Meanwhile, DeepSeek continues to release advanced reasoning models, and its open-source nature means anyone can access its technology — an overall win for AI proponents and smaller companies, but a loss for tech leaders determined to assert American superiority.
DeepSeek’s success has raised doubts around the outcome of the AI race and whether all this investment in the technology is really worth it. Even then, U.S. tech companies have doubled down on their efforts to beat DeepSeek and other global challengers, going so far as to claim that higher forms of intelligence are within their reach.
Human-Level Intelligence Remains on the Horizon
Artificial general intelligence (AGI), or AI that thinks and learns like humans, has been a highly sought-after yet elusive goal in the tech industry. With AGI as its central mission, OpenAI launched its much-anticipated GPT-5 model, which features impressive coding capabilities, fewer hallucinations and complex problem-solving. However, GPT-5 fell far short of lofty expectations, while its chaotic rollout managed to alienate users who weren’t quite ready to move on from the older models.
At the same time, Meta set its sights even higher on what’s known as artificial superintelligence — AI that surpasses all aspects of human intelligence, from problem-solving to emotional understanding. The company formed Meta Superintelligence Labs, a new division that encompasses Meta’s various AI research projects, products and foundation models. Unfortunately, this decision only led to a messy reorganization, eventually forcing Meta to pause hiring after spending a fortune on assembling its superintelligence team.
In short, neither company seems any closer to attaining AGI or superintelligence. The problem is that they still rely on large language models. While LLMs are built to understand and generate human language, they end up predicting the next word or phrase in a sentence without actually perceiving how the world works. Taking AI to the next level requires this real-world knowledge, and that can only come with new physical forms that more closely simulate how humans experience reality.
AI Prepares to Get Physical
A key obstacle blocking further AI evolution is known as the AI “body” problem, which refers to AI being trapped in outdated devices like laptops and smartphones that don’t facilitate real-time interactions. To solve this issue, OpenAI partnered with tech designer Jony Ive to produce a novel device that’s described as pocket-sized, screenless and similar to the iPod Shuffle. It will compile real-time data through sensors and cameras, while integrating with other devices. The device is still a ways away, but it’s expected to arrive within the next two years.
Another area where AI is gaining traction is self-driving cars, particularly robotaxis. Elon Musk’s Tesla is developing a robotaxi fleet to deliver completely driverless, on-demand ride-hailing services. The fleet will initially consist of Tesla’s Model 3 sedans and Model Y SUVs outfitted with Full Self-Driving software, although Tesla plans to replace them with its upcoming Cybercab model. So far, the company has been making steady progress, with driverless tests underway in Austin, Texas.
At this point, the one factor that could upend both companies’ plans is regulation: Existing laws may be ill-equipped to address privacy concerns around AI-first devices, while safety failures have undermined autonomous vehicles in the past. It remains to be seen how this will all play out, but OpenAI and Tesla will likely hope for the same regulatory favor bestowed upon TikTok and Google this past year.
Big Tech Avoids Major Legal Setbacks
Tech companies dodged some major legal blows this year, especially TikTok. The U.S. Supreme Court upheld a 2024 act banning the platform in the United States, but Trump signed an executive order delaying the ban within days of reentering the White House — and signed several more after that to keep the app alive.
Finally, in September 2025, the president signed yet another order approving a “qualified divestiture” that will separate the app from its Chinese parent company, ByteDance, allowing it to permanently operate in the United States. The order approved a deal for TikTok to sell its U.S. operations to American ownership and transition U.S. user data to cloud company Oracle — an agreement that TikTok has recently accepted, ending years of uncertainty.
Google may have received the biggest legal break, though, after facing an antitrust lawsuit that would have forced it to sell its wildly popular search engine, Chrome browser and Android operating system. A federal judge ultimately ruled that generative AI companies like OpenAI, Anthropic and Perplexity present enough competition to dismiss Google’s monopoly status. Ironically, the decision has enabled Google to refocus its energies on catching up in the AI race, culminating in the release of its Gemini 3 model.
These rulings reflect the more tech-friendly environment promoted under the Trump administration, opening the door for the next giant to emerge. While traditional powerhouses like Google remain strong, younger AI startups may have an opportunity to seize control of the industry — none more so than OpenAI.
OpenAI Makes a Move for AI Dominance
While OpenAI made headlines with its robotics reboot, Atlas browser and massive cloud deals, none of its initiatives captured mainstream attention quite like its video app, Sora. The platform allows users to create AI-generated, short-form visual content with written prompts, drawing OpenAI into competition with TikTok. Although the app has been associated with the output of useless content known as AI slop, OpenAI likely won’t care as long as it serves as a viable source of income to help fund the company’s next phase.
OpenAI’s expanded portfolio was merely a buildup to its restructuring as a public benefit corporation, officially shedding its nonprofit status and establishing a for-profit branch to generate income from its business ventures. The move also saw OpenAI and Microsoft reach an agreement to rework their longstanding partnership, securing the tech titan’s blessing for OpenAI to move forward with its for-profit plans.
These decisions position OpenAI to pull further ahead of the pack, yet it’s far from being in the clear. For one, OpenAI’s various business deals have sparked suspicions of circular financing, leading to fears of an AI bubble that’s ready to pop. In addition, OpenAI CEO Sam Altman declared a “code red” after Google’s Gemini 3 release, reallocating resources toward improving ChatGPT. The company is still poised to be at the forefront of AI innovation, but its industry lead is a bit shakier than initially expected heading into 2026.
Why 2026 Could Be an Even More Crucial Year for Tech
Given how 2025 unfolded, the tech sector is at a bit of a crossroads. On one hand, Trump has attempted to aid tech companies by rolling back regulations, even signing an executive order banning any state laws related to AI. He’s also attacked laws in the European Union, likely contributing to the bloc’s decision to reassess its rules. If Trump has his way next year, the AI industry could really run wild in a global landscape characterized by lighter regulation.
At the same time, Americans’ growing concerns over AI have mobilized politicians to pass legislation on chatbots, push for more data on AI-driven job losses and form pro-regulation super PACs. This anti-AI backlash could very well turn the tables on Trump and his Big Tech allies during the 2026 midterms, filling Congress with candidates who also support managing AI and the tech sector with a firmer hand.
As a result, the stakes couldn’t be higher as 2025 finally winds down, giving way to a potentially more explosive year where voters must decide just how much they want AI and other technologies to reshape their daily lives.
Frequently Asked Questions
How did DeepSeek impact the AI race?
DeepSeek’s DeepSeek-R1 model spooked larger American tech companies by rivaling their models’ performance at a much lower price. In response, U.S. Big Tech invested billions into expanding America’s AI infrastructure to fuel more powerful models. But DeepSeek has left investors questioning whether AI is really worth billions in spending, while tech titans continue to accelerate their infrastructure development.
Why did OpenAI change its corporate structure?
OpenAI transitioned from a nonprofit to a public benefit corporation to generate income from its business activities. Under this new structure, OpenAI has a reworked relationship with Microsoft that gives it more flexibility when raising funds. Developing more sources of revenue will be vital for OpenAI as the company seeks to follow through on its numerous business deals, while fending off Google in its bid to control the AI industry.
Why wasn’t Google broken up in its antitrust case?
Google faced an antitrust lawsuit that threatened to break up its business empire, including its search engine, Chrome browser and Android operating system. However, a federal judge found that companies like OpenAI, Anthropic and Perplexity now provide sufficient competition to remove Google’s monopoly status, making a complete breakup unnecessary.
