Tech investors are increasingly embracing high-risk, capital-intensive ventures reminiscent of the early days of Silicon Valley, driven by the surge in artificial intelligence (AI) innovation and shifting market dynamics. This renewed appetite for so-called "moonshot" projects is reviving interest in ambitious scientific breakthroughs such as nuclear fusion, brain-machine interfaces, and space technologies.

Since the start of 2024, global investment in deep tech—companies focused on advanced scientific and engineering solutions—has surpassed $150 billion, already exceeding the total for the entire decade up to 2019. This rise comes amid a decline in valuations for traditional software firms and significant returns for early investors in companies like SpaceX, encouraging venture capitalists to take on more speculative opportunities.

Matt Robinson, a partner at venture capital firm Accel, noted that the types of companies discussed within the industry have dramatically transformed in recent years. Whereas investment previously favored predictable enterprise software and internet-based businesses, the current climate is shifting toward riskier technologies with longer timelines and traditionally higher capital requirements.

Max Hodak, co-founder of the brain-computer interface start-up Science and Neuralink, described the prior focus on software as a detour from the hardware ventures that initially fueled Silicon Valley’s growth. He argued this renewed focus on physical technologies marks a return to the traditional innovation cycle of venture capital.

While deep-tech funding has not yet reached the peak seen in 2021—which was buoyed largely by electric vehicle and battery makers such as Rivian and Northvolt, many of which experienced difficulties—AI-related investments are driving a new wave of speculative ventures. These include proposals to revolutionize data center infrastructure or deploy technology in space.

Venture capitalists working in frontier technologies acknowledge the challenges of underwriting these ventures, where traditional financial metrics often do not apply. As one investor put it, moving beyond software-as-a-service (SaaS) requires different approaches to assessing risk, given the absence of established benchmarks.

AI is playing a key role in accelerating progress by enabling sophisticated simulations that reduce the costs and risks associated with hardware development. Carina Namih, an investor at London’s Plural VC, emphasized how AI-driven "in silico" experimentation is rapidly advancing areas like fusion energy and space tech, potentially lowering the capital intensity required.

Alphabet’s innovation lab X helped popularize moonshot investing over a decade ago, producing successes such as Waymo and failures like Loon. More recently, the lab has taken a more measured approach, scrutinizing both business cases and technical feasibility before committing substantial resources.

Significant 2026 investments in non-AI deep tech include space companies Sierra Space, Axiom Space, and Iceye, alongside fusion ventures Helion, Proxima, and Inertia. Industry observers see falling launch costs and AI-enabled design cycles spurring a new wave of space industry start-ups, with some investors likening the current phase to a “Cambrian explosion” of innovation.

Ariel Ekblaw, CEO of the Aurelia Institute and a space tech investor, highlighted the increasing practicality of space-based projects due to advances in AI and reduced barriers to entry. She cited emerging applications such as orchestrating solar power in orbit and space-based manufacturing, naming start-ups like Overview Energy and Reflect Orbital that aim to use mirrors to reflect sunlight back to Earth.

The recent downturn in software stocks has also encouraged investors to reconsider their strategies amid fears that AI could erode the competitive advantages, or “moats,” that protected many incumbents. Bejul Somaia of Lightspeed Venture Partners suggested AI companies could eventually dominate markets once served by traditional software.

This evolving landscape has prompted calls for a reimagining of venture capital, with Hemant Taneja of General Catalyst arguing that founders today must build companies orders of magnitude larger than before to justify investment given the uncertain future value of many technologies.

Despite the label, Hodak, whose company Science is preparing to launch a retinal implant to restore sight, views the “moonshot” concept as misunderstood. He stressed that ambitious goals do not necessarily imply improbability, citing the original Apollo moon landing as proof that large-scale technological feats can be achieved.

As deep tech and AI continue to reshape the investment ecosystem, the sector faces both opportunity and uncertainty in translating bold scientific visions into commercial success.