US midterm elections raise stakes for AI-related stocks as regulation stalls

The US midterm elections are less than two months away, and Congress has managed to do what Congress does best: talk about doing something important without actually doing it. Multiple bipartisan AI safety bills sit in legislative limbo with virtually no chance of passing before voters head to the polls in November, creating a fog of uncertainty that’s already dragging down AI-related equities. The Philadelphia Stock Exchange Semiconductor Index, better known as the SOX, recently fell nearly 6%, its worst stretch in over two months. The index is now down roughly 24% from its June peak. A legislative traffic jam with no off-ramp The problem isn’t a lack of proposals. Lawmakers have been busy drafting bills. The Frontier Act would require audits of advanced AI models. The AI Kill Switch Act is exactly what it sounds like: a mechanism to shut down AI systems deemed dangerous. Senators from both parties have been negotiating a broader “duty of care” framework for companies building frontier models. The problem is that none of these proposals have cleared the procedural gauntlet required to become law. Key negotiators include Senators John Thune, Amy Klobuchar, and Ted Cruz, a trio that...