Key takeout
Many states introduced AI-related laws in the mid-2020s. Most publicly available companies include Meta Platforms Inc. (Meta), Alphabet Inc. (Googl), Amazon.com Inc. (AMZN), and Microsoft Corporation (MSFT).
Big Tech’s dream of generating key profits with minimal oversight from AI was hit hard in 2025 after Republican efforts in Congress stopped 10 years of sector regulation.
The July 2025 AI Action Plan from the White House threatened AI-related laws that the administration considers troublesome. Still, states are moving rapidly to move from the current AI boom that can lead the book laws that act as a reality check for many investors who are actively purchasing technology stocks without taking into account the full regulatory risks.
AI Legal Maps by State
According to the International Association of Privacy Professionals, which tracks AI governance laws across the country, almost half of all states either seriously consider AI laws or enact them.
As you can see, AI regulations are no longer limited to California. We divided state-level activities into four broad categories.
Those who pass major laws (lightest blue): California, New York, Colorado and Texas have multiple major laws in consideration of enacting comprehensive AI laws. Recently, we have enacted a target law law. Regularly under consideration: 11 states have introduced AI bills that have stagnated or recently withdrawn in their commissions, but these legislative efforts have shown growing political interest in AI surveillance. These states may move to aggressive regulation in future sessions. Clear Legislative Activities (Darkest Blue): 26 states have yet to implement comprehensive private sector AI governance laws, but almost all states have at least some legislation implemented by law committees.
Big Tech Regulation Exposure: Who is at the Most Risk?
State-level AI laws have the potential to include compliance costs, litigation risk, delay or redesign products, and serious financial penalties. Large tech companies lobbyed extensively with Congress and the Trump administration in 2025 to avoid state action through federal law, but eventually came empty-handed in terms of achieving their goals through federal law. These are the most at-risk companies.
META (Facebook/Instagram) relies heavily on AI for content moderation, recommended algorithms, new product development, and ad targeting. Its AI application has repeatedly caused controversy and legal action. The company was forced to pay Texas and Illinois a total of more than $1.4 billion in settlements, due to facial recognition technology violating state privacy rules. In April 2025, a Wall Street Journal survey said its AI chatbot introduced sexual content to minors and raised safety concerns about the area where Meta is placing a big bet.
Amazon relies heavily on AI for warehouse automation, delivery optimization, demand forecasting, inventory management, cloud services via AWS, ring security systems, and Alexa Voice Assistant. Among other controversies, in 2018, the company scrapped an AI-driven tool that is said to discriminate against women. In July 2025, employees with disabilities wrote to executives who claimed that the AI system was engaged in “systematic discrimination” against them.
Alphabet (Google) deploys AI technology for almost every operation, including search algorithms, Gmail, Google Cloud, YouTube recommendations, and targeted ads. The company faces multiple controversies over the system’s AI bias, including the issues of Gemini AI models that have produced racist and misogynistic images, and allegations that search algorithms exhibit similar bias. Meanwhile, the company’s AI overview errors remain a consistent PR issue for the company.
Microsoft is a leading Openai investor behind ChatGPT, using AI across its business, from productivity software and cloud infrastructure to security, customer service and enterprise tools. Like other major AI companies, the company faces a lawsuit alleging that it used copyrighted materials to train its systems.
Conclusion
AI remains an opportunity for large-scale growth, but the companies driving this revolution (Meta, Amazon, Alphabet, Microsoft) will face patchwork of state rules that could increase compliance costs, create operational complexity, and limit the potential limits that allow them to deploy AI technology proactively. For investors, this could represent a change in the risk/reward profile of large tech companies that are most unable to adapt to these new laws.
