Photo: Element5 Digital / Pexels
Congress is almost certainly not passing AI safety legislation before November, and semiconductor stocks are already feeling the pain.
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 spans the ideological spectrum and still can’t get a bill across the finish line. The legislative window for the current session is essentially closed, meaning any meaningful AI regulation now depends entirely on what happens after the midterms.
The news moving money, markets, and the world—before your day starts.
Daily. Free. Join 34,000+ readers across crypto, finance, and policy.
The White House versus the polls #
President Trump has been vocal in his opposition to new AI regulations, framing safety concerns as overblown and arguing that excessive rules would hand a competitive advantage to China.
The public doesn’t entirely agree. Polls show strong bipartisan support for mandatory federal safety reviews of advanced AI systems. Voters across party lines appear to want some guardrails, even if AI regulation doesn’t rank as a top voting priority alongside issues like the economy and healthcare.
What the market is pricing in #
The SOX index decline isn’t happening in a vacuum. Beyond regulatory fears, there’s growing backlash against the enormous energy consumption of AI data centers. Training a single frontier model can consume as much electricity as a small town uses in a year, and communities near proposed data center sites have started pushing back.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our