AI Stocks Slip As Senate Strips Federal Ban On State AI Regulation From Trump's Spending Bill

Shares of leading AI companies like NVIDIA Inc. NVDA and Palantir Technologies Inc. PLTR traded lower Tuesday after the U.S. Senate voted to strip a key provision from President Donald Trump's proposed tax and spending package.

What To Know: The provision would have blocked states from independently regulating artificial intelligence for the next 10 years. Its removal opens the door for a patchwork of state-level AI rules that could complicate operations for companies working in the space, according to Reuters.

The Senate passed the amendment with overwhelming support in a 99-1 vote. It came during a lengthy "vote-a-rama" session as lawmakers debated the broader bill. While the original version of the legislation would have tied access to a $500 million AI infrastructure fund to a commitment from states not to regulate AI, that link has now been severed.

Nvidia shares, which have seen heavy buying throughout the year on the back of strong demand for AI hardware, were down nearly 3% in after-hours trading. Palantir, which recently positioned itself as a platform for companies to build AI tools on top of, dropped more than 4%.

Investors may be rethinking the long-term simplicity of the AI regulatory landscape in the U.S., especially as more states signal interest in passing their own laws.

The decision doesn't impose new rules, but it removes a federal barrier that had given companies some degree of clarity and consistency. Now, the risk of navigating dozens of differing state laws may become a new consideration for developers and investors alike.

While the amendment’s passage was expected by some, its confirmation may have contributed to Tuesday’s pullback in several high-flying AI stocks.

PLTR, NVDA Price Action: Palantir shares closed Tuesday down 4.14% at $130.68 and Nvidia shares closed down 2.97% at $153.30, according to Benzinga Pro.

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