It’s a complicated time for the tech sector of the stock market right now, as many of the industry’s leading names continue to trend downward.
The Magnificent 7, the group of industry-leading companies often responsible for most of the sector’s growth, is struggling, casting further uncertainty over the market. Tesla (TSLA) , Nvidia (NVDA) , and Amazon (AMZN) are among top tech stocks that seem unable to regain their typical momentum.
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When President Donald Trump defeated Kamala Harris in the 2024 U.S. presidential election, many experts viewed it as a bullish indicator for the tech sector as CEOs rushed to curry favor with him. However, many tech stocks are struggling a month into Trump’s term.
However, Thursday brought reports that Microsoft (MSFT) is taking action to address something it believes is negatively impacting the industry, specifically artificial intelligence (AI) growth.
Microsoft believes a certain public policy is hindering AI
During the final stretch of his time in the White House, President Joe Biden announced a new policy that shocked members of the tech world. The AI Diffusion Rule restricted AI chip exports, specifically where U.S. companies could send them.
This didn’t sit well with the U.S. chipmakers who stood to be impacted by this new policy. Ned Ned Finkle, Nvidia’s vice president of government affairs, published a blog post stating that his company did not believe such a policy would be in the industry’s best interests.
Related: Big tech leader slams President Biden for new AI policy proposals
Microsoft has taken up the banner and is joining the fight against Biden’s AI policy. President and chairman Brad Smith recently published a post of his own on the Microsoft blog advocating for Trump to change Biden’s AI Diffusion Rule, arguing that the policy stands to significantly undermine the nation’s global AI dominance.
“As drafted, the rule undermines two Trump administration priorities,” he states. “Strengthening U.S. AI leadership and reducing the nation’s near trillion-dollar trade deficit. Left unchanged, the Biden rule will give China a strategic advantage in spreading over time its own AI technology, echoing its rapid ascent in 5G telecommunications a decade ago.”
Smith adds that the AI Diffusion Rule goes beyond what the U.S. needs while arguing against its multi-tier system. As he sees it, the policy “puts many important U.S. allies and partners in a Tier Two category and imposes quantitative limits on the ability of American tech companies to build and expand AI data centers in their countries.”
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Examples of such countries include India, Saudi Arabia, and the United Arab Emirates (UAE), according to Smith. He adds that many U.S. companies have data center operations in these nations, and others have been placed in the second tier of the AI diffusion rule, restricting trade relations that the U.S. can have with them when it comes to AI chips.
U.S. tech companies want to continue expanding their global reach
Smith notes that as it stands, “the American tech sector wants to invest in AI computing capacity at an unprecedented level,” highlighting Microsoft’s plan to invest $80 billion in developing AI infrastructure around the globe.
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Many leading tech companies indeed announced plans to significantly increase their AI spending in 2025, as indicated by their high capital expenditure figures. Magnificent 7 members, such as Amazon and Meta Platforms, have plans to ramp up AI investments in an attempt to capitalize on booming demand.
“As the tech sector invests billions of dollars to build data centers around the world, we are developing global supply chains that combine international and American suppliers of more traditional manufactured goods,” Smith notes.
He cites Vice President JD Vance’s recent statements at the Paris AI Action Summit as an example of how the U.S. should approach AI and why the sector needs these restrictions to be lifted for it to continue growing.
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