To win the AI race, California and D.C. must find common ground

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OPINION – The Trump Administration last month unveiled its long-awaited AI Action Plan – a landmark moment in the country’s drive toward global AI leadership. With robust commitments to next-generation infrastructure, expanded workforce pipelines, and streamlined regulation, the Plan lays a strong foundation for national innovation.

Politics, however, could get in the way.

Tucked within the plan are troubling provisions that risk sidelining the very states driving America’s AI momentum, including and especially California.

Federal funding and contracts may very well be tied to reducing undefined “regulatory burdens” and embracing vague standards for “political neutrality” in AI models. That puts California – the global leader in AI and the engine of the worldwide tech boom – directly in the crosshairs.

If the U.S. is serious about leading the world in AI, California and Washington, D.C. must be partners, not rivals, on this issue. This is particularly important in the face of a rising China that is taking a whole-of-society approach to this technology.

The AI Action Plan has three core pillars: accelerate innovation, invest in next-generation infrastructure, and position U.S. AI as the global gold standard. None of those objectives can be met without California.

Our unparalleled research institutions, start-up community, and deep talent pool have made it the global epicenter of AI development.

Consider Nvidia, a Bay Area powerhouse that recently became the world’s first company to hit a $4 trillion market capitalization thanks to the AI wave. Meanwhile, venture capital has followed suit: AI and machine learning start-ups in the Bay Area drew an astonishing $74.6 billion in the first half of 2025 alone, outpacing last year’s total and dwarfing the $46.7 billion invested in 2021.

Here’s how California and D.C. can work together to sustain this momentum and accelerate the U.S.’ global AI leadership:

Invest in regions where innovation, talent, and infrastructure already thrive. Dollars should flow to states and regions poised to deliver the greatest value, period. That means supporting hubs like Silicon Valley that are producing the next generation of AI tools, startups, and research.

With world-class universities, deep tech talent, a vibrant startup ecosystem, and leading research institutions, California – especially the greater Bay Area – remains one of the few places in the world capable of developing AI technologies that serve both the national interest and global competitiveness. Penalizing these tech pioneers would only stifle our nation’s innovation economy.

Foster public-private partnerships to advance and scale AI. Smart policy requires smart collaboration between industry, business, and government. These partnerships are critical to translating cutting-edge research into scalable applications, building AI infrastructure, and responsibly deploying technology in sensitive areas like healthcare, public safety, and education.

Look no further than the City of San Jose’s effort to integrate AI-driven traffic management systems or the rollout of an AI-focused curriculum at Sacramento State University. Federal efforts should accelerate these partnerships, not restrict them based on political boundaries.

Advance infrastructure that will accelerate AI adoption. California’s municipalities are laying the groundwork for AI’s future through infrastructure modernization. PG&E’s smart grid pilot projects, which harness AI to optimize electrical distribution and enhance resiliency, will power the next wave of responsible AI adoption in California.

Meanwhile, the City of San Jose’s initiatives to streamline permitting for AI-ready data centers demonstrate how regional infrastructure investments can harness the enormous benefits of AI while still prioritizing sustainable growth. Washington, D.C. lawmakers should be eager to learn from, invest in, and expand these models in the Golden State and beyond.

When the California Legislature reconvened on August 18, it took up a wave of AI bills. AB 222 and SB 57 propose new requirements for data centers, including energy disclosures and tariffs. SB 53 aims to restrict the development of large models, and AB 1018 would create new obligations around transparency and opt-outs for automated decision-making tools.

These proposals aren’t perfect. But punishing AI pioneers simply because their home state imposes stricter guardrails is a step backward.

The stakes are too high to let politics dictate progress. If the U.S. wants to lead the world in AI, it needs to harness the full power of the innovation economy – and that means keeping California at the center of the table.

Laura Wilkinson is Senior Vice President of Strategy and External Affairs for the Silicon Valley Leadership Group.