Government Action Could Pose a Greater Threat Than Technology Itself
BCA Research believes the most significant challenge facing artificial intelligence investors is not whether the technology works, but how governments and voters ultimately respond to its rapid adoption.
In a new research note, Chief Geopolitical Strategist Matt Gertken argued that political resistance to AI is steadily increasing and could lead to tougher regulation, higher taxation and broader restrictions on the industry over the coming years.
The firm’s central conclusion is that “the populist backlash against AI could result in bipartisan regulation in 2027, but is especially likely to prompt tax hikes from 2029.”
Employment Concerns Are Driving the Debate
According to BCA, fears over job displacement remain at the heart of growing opposition to artificial intelligence.
As businesses increasingly adopt automation technologies, workers in service-heavy economies are becoming more concerned about the impact on employment opportunities and income growth.
The report noted that policymakers in several countries are already discussing measures ranging from regulatory oversight and taxation to redistribution policies and limitations on new data centre developments.
Public Opinion Is Becoming More Cautious
BCA also pointed to weakening public sentiment toward artificial intelligence, particularly in the United States.
The firm said more Americans now believe AI is advancing too quickly and are becoming less confident that its benefits will outweigh its risks.
Younger generations appear to be among the most sceptical groups, reflecting concerns about how automation could affect future career prospects and economic security.
Major Regulation Often Follows a Catalyst
Looking at previous industries that experienced significant government intervention, BCA observed that sweeping regulations generally emerged after a major triggering event.
The firm cited examples from banking, healthcare and nuclear energy, where public and political pressure intensified only after a crisis occurred.
Although AI has yet to face such a defining moment, BCA warned that the technology “could be scapegoated amid an unrelated crisis.”
Potential catalysts could include an economic downturn, widespread AI-related layoffs, renewed inflation pressures or a high-profile accident involving artificial intelligence systems.
2028 Election Seen as Key Turning Point
BCA believes political risks surrounding AI could increase substantially over the next several years, particularly as the United States approaches the 2028 election cycle.
Growing voter concerns may encourage lawmakers to adopt stricter oversight measures and seek additional tax revenue from large technology companies benefiting from the AI boom.
The firm concluded that “the investment risk is political, not technological,” warning that aggressive regulation and higher taxes on AI-related businesses could emerge “as early as next year — and especially after the 2028 election.”
More about AI Investment Risks
Artificial intelligence has become one of the largest investment themes globally, driving spending across cloud computing, semiconductors, software and digital infrastructure. While much attention remains focused on technological progress and commercial adoption, political and regulatory developments are increasingly being viewed as critical factors that could shape the sector’s long-term growth prospects.
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