Innovation and Emerging Technologies
Situation Update (ongoing context)
The defining fight in US tech policy is no longer whether to govern AI but who gets to. After a Senate “vote-a-rama” killed a proposed federal moratorium on state AI laws 99–1 last July, and after a similar provision was dropped from the 2026 defense bill, the Trump administration shifted to executive action. On December 11, 2025, the President signed “Ensuring a National Policy Framework for Artificial Intelligence,” directing DOJ to challenge “onerous” state laws, the FTC to issue preemption guidance, and Commerce to condition BEAD broadband funds on state compliance. Legal scholars stress the order cannot actually preempt state law without Congress, setting up a federalism collision.
That collision is now live. DOJ stood up an AI Litigation Task Force on January 9, 2026, with the Colorado AI Act — effective June 30, 2026 — as an early target, the administration arguing its anti-discrimination rules would “force AI models to produce false results.” Meanwhile the parallel “Genesis Mission“ order tasks the Department of Energy with building an “American Science and Security Platform” linking supercomputers and federal datasets to accelerate AI-driven research.
Underneath the policy fight sits an economy-shaking capital question: is the AI build-out a sound investment or a bubble? Global AI-related capex is forecast near $800 billion in 2026, and skeptics including Michael Burry have placed large bets against AI names, warning the pattern resembles the dot-com bust. Bears point to “circular financing” — Nvidia investing in OpenAI, which buys from Oracle and CoreWeave, which buy Nvidia chips — and to a late-April Wall Street Journal report that OpenAI missed internal user and revenue targets, which triggered a sell-off in Oracle and CoreWeave and a roughly 10% drop in SoftBank. Bulls counter that demand is real and compute-constrained.
The most politically potent side effect is electricity. Data centers now consume about 6% of US power and drove half of last year’s demand growth. In Virginia’s “Data Center Alley,” prices have surged and the boom is now raising bills in neighboring West Virginia; 78% of Americans worry facilities will raise their bills. Lawmakers in more than 30 states filed 300-plus data-center bills in 2026, and Oregon now lets utilities charge data centers separate rates — though some research disputes the direct link between data-center density and prices.
The frontier-lab race has reordered the leaderboard. Anthropic — riding Claude Code — raised $65B at a $965B valuation in late May and confidentially filed for an IPO on June 1. Google shipped Gemini 3.5 Flash at I/O and struck an unusual deal to pay SpaceX $920 million a month for orbital-adjacent compute access to roughly 110,000 GPUs. On chips, the administration reversed course and cleared Nvidia’s H200 for ~10 Chinese firms (Alibaba, Tencent, ByteDance) at 75,000 units each, though deliveries remain in legal limbo. Industrial policy has gone equity-first: the government’s 9.9% Intel stake, converted from CHIPS grants, is now valued in the tens of billions, while TSMC’s Arizona commitment has grown to $165 billion.
