Dear Reader,

The future of AI is up for grabs this week.

Tech moguls like Elon Musk, Mark Zuckerberg, Bill Gates, Sam Altman, and Jensen Huang are meeting with Congress in Washington right now. The event is the first – of likely several – “AI Insight Forums.”

The stakes don’t get much higher.

On one side, politicians want to make sure that AI doesn’t interfere with national security, the economy, or most importantly – their re-election campaigns.

On the other side, the tech billionaires want favorable legislation that further entrenches their status… and slows down competition.

The meetings are running today and tomorrow. Some will be televised… while others will be held behind closed doors.

But don’t get lost in the theatrics of the public talks.

The winners and losers of the AI race will largely be decided by the bills that get drafted and passed in the wake of this event.

That’s because, behind closed doors, the nation’s elite will be making deals to maintain the status quo of power.

And we already have some details about what these deals will involve.

U.S. AI Act

Ahead of this week’s meetings, senators put forward a bipartisan framework for what is likely to become the U.S. AI Act.

The bill proposes:

  • A licensing and oversight system for AI developers.

  • Clarifying how AI developers are to be held liable for their models.

  • Limiting the export of AI tech to nations like China and Russia.

  • Requirements for transparency around the AI models’ capabilities and sources.

  • Human review for certain AI prompts.

  • Limiting the involvement of children and AI.

At face value, the proposed bill seems sensible. But we can already see where politicians are placing their priorities.

Here’s one line from the act:

Congress must take steps to directly prohibit harms that are already emerging from A.I., such as non-consensual explicit deepfake imagery of real people, production of child sexual abuse material from generative A.I., and election interference.

The first two goals are common sense. But it’s interesting that Congress is proposing watermarks to prevent “election interference.”

It makes sense. With current deepfake and AI technology, it’s almost trivial to insert a politician’s likeness into a damning video clip or photo.

Normally, these things are difficult to disprove. And under the court of public opinion, a politician could lose an election bid during the confusion.

By adding watermarks that are difficult to detect and remove, officials can quickly prove when a fake has been circulated.

I suspect these watermarks will be assigned during the proposed licensing process.

I could see the licensing process becoming expensive, complicated, and time-consuming. Even then, it’d be to the benefit of the current set of tech giants. That’s because it will be a major roadblock for startups that don’t have an army of lawyers and billions in annual cash flow.

If this comes to pass, it’ll be the first example of AI regulatory capture – a tactic I warned you about in June.

That’s when a small group of companies convinces the government to pass regulations to keep out new competitors.

Of course, the ramifications extend beyond just keeping the little guys out.

It’s about crafting laws that maintain the status quo.

Securing Power

For months now, I’ve been telling readers that AI is being led by the big tech companies like Alphabet, Meta, Tesla, and Microsoft.

These companies are the only ones with the cash, tech knowledge, and datasets to build powerful AI models. That’s why they’ve had the pick of the litter in terms of startups to work with.

Once regulations are in place, they’ll be able to further cut down on the competition.

I know this can sound depressing. It goes against the very principles this nation was built on. But we can either deny the truth. Or we can predict these companies’ moves and profit from them.

Either way, the future of AI will be shaped by a small group of tech oligarchs and Washington elite.

Needless to say, I’ll be watching the hearings closely. And I’ll be keeping an eye out if and when the proposed legislation becomes law.


Colin Tedards
Editor, The Bleeding Edge

P.S. The fact that Congress is taking such a sudden interest in artificial intelligence tells me that this technology is unstoppable. And I’m utterly convinced it will be the investing megatrend of the next decade.

But here’s the problem: Most people are investing in AI all wrong…

They’re focused almost exclusively on just one or two stocks. Meanwhile, there is an entire ecosystem of smaller, more explosive AI companies flying under the radar. But I don’t think that will last for long.

You see, there is one small-cap company that is a key supplier to none other than Nvidia, the king of AI hardware. Nvidia depends on this company for its business to operate. And yet, very few have heard of it.

I’d like to give you all the details on my AI investing strategy – including my No. 1 small-cap AI recommendation – in an upcoming presentation, The Nvidia Effect.

It all goes down on Wednesday, September 20 at 8 p.m. ET. You can reserve your seat with one click right here.