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Investing.com -- The United States is showing “growing momentum for AI backlash” across multiple fronts, according to Jefferies analyst Aniket Shah, who outlines seven areas where resistance is accelerating.
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In a new report, Shah said the trend is visible “from various angles,” ranging from state legislation to public sentiment and warnings from leading researchers.
Jefferies said state-level regulation has become the clearest sign of pushback.
In the absence of federal rules, “states have surged ahead with AI laws,” creating a compliance patchwork that may slow deployment.
Shah noted that by mid-2025, 47 states had considered legislation and more than 30 had enacted statutes targeting hiring bias, health care, generative AI and transparency requirements.
The analyst cited California’s SB-53, which mandates “safety frameworks and whistleblower protections for frontier AI developers,” as well as New York’s RAISE Act, which includes penalties of up to $30 million.
Major court cases are also said to illustrate rising scrutiny. Jefferies highlighted Mobley v. Workday, which questions whether AI-screening vendors can be held liable as “agents” under anti-discrimination laws.
Another closely watched case, The New York Times v. OpenAI & Microsoft, could “redefine fair use for generative AI.”
Federal deregulatory attempts have also stumbled. Shah noted that the proposed AI moratorium in the One, Big, Beautiful Bill “was unsuccessful,” with senators voting 99–1 to remove it after concerns over federal overreach.
Jefferies believes an executive order to block state AI laws is being explored but faces “constitutional hurdles,” including limits under the Spending Clause and the anti-commandeering doctrine.
Other drivers of backlash cited by Jefferies include job displacement fears, industrial resistance to AI-driven disruption, “rising power prices,” waning public support and leading AI scientists “urging restraint.”