Name the businesses leading the artificial intelligence arms race and it’s likely that Google, Nvidia, OpenAI, and Anthropic, among others, come to mind. What do these four companies have in common? Their founders are Stanford alumni.

Jonathan Levin, the president of Stanford and a senior fellow at the Stanford Institute for Economic Policy Research (SIEPR), made this point during the kickoff session at the 2025 SIEPR Economic Summit – but not as a matter of bragging rights. He was highlighting the important role that universities like Stanford play as engines of economic growth at a time when federal funding for academic research has come under threat by policymakers in Washington, D.C.

“If you look at the ideas that underpin all of [today’s AI] models,” he said, “these all came out of academic research.”

The AI revolution is one example of the “entrepreneurial and innovative ecosystem” that Stanford has helped foster – and that has powered U.S. economic growth for decades – since higher education became integral to the nation’s science and technology strategy after World War II, which led to massive federal funding of research.

In a conversation with Neale Mahoney, the Trione Director of SIEPR and an economics professor in the Stanford School of Humanities and Sciences, Levin said that, for every $1 in federal grant funding that Stanford receives, about 72 cents goes to the researcher and 28 cents pays for the necessary underlying infrastructure, such as labs and support staff.

About $60 million worth of infrastructure-related funding that Stanford receives each year is at risk after the National Institutes of Health, the country’s largest funder of biomedical research, moved recently to significantly cut back on these so-called “indirect costs.” That effort is on hold due to lawsuits challenging the cutbacks.

Levin welcomed the opportunity to examine Stanford’s structure, saying it’s important to “be really efficient stewards of taxpayer dollars” and to think about “how can we run the university more effectively?” At the same time, he cautioned against underestimating the value of federally funded research.

“Every study of investment in university research has found that a dollar put into university research and science has a payoff of multiple dollars over time in social benefits,” said Levin, who is an economist and served as dean of the Stanford Graduate School of Business before becoming Stanford’s 13th president in August 2024.

Levin, in response to a question from the audience, delved into a second threat that Stanford and other larger private colleges and universities face: a significant increase in the tax, instituted during President Trump’s first administration, on the income endowments earn from investments.

The pushback on endowments, which are privately funded and often come with restrictions on how they can be used, reveals a misunderstanding about the critical role they play in ensuring that universities like Stanford continue to thrive for the long term, Levin said.

Even so, he acknowledged that the misperceptions about the purpose of university endowments is based on “valid criticism.” “There’s a sense that we drifted away from many people in the country and got out of touch,” Levin said. “We have to take that critique seriously.”