AI Crossroads: regulation, talent and the rise of new innovation hubs  

As Democrats consolidated their dominant position both in the Senate and House of Representatives, the technology-heavy Nasdaq 100 index fell 6.3% on the 5th of November, wiping out $2.3 trillion in market value, as investors reassessed the risks facing the billions of dollars invested in the AI sector.

The sharp sell-off on Wall Street also had its tremors felt across tech-heavy indexes in Nikkei, KOSPI, and Taiex, with Indian benchmark indices like the Sensex and Nifty 50 being the only exception, insulated from the rest of the AI trade in Asia.

With democrats' making AI and data centre regulation an election agenda along with affordability, shares of AI infrastructure providers, chipmakers, and data centre operators came under pressure, amid concerns over the profitability of massive AI investments and the potential regulations that could slow down growth. Prominently, Bernie Sanders, U.S. Senator representing Vermont, said, “We cannot allow a handful of big tech billionaires to become even richer and more powerful by ramming this dangerous technology down our throats. Democrats must enact a national moratorium on AI data centres, must pause advanced AI development and ban superintelligence”.

For industry watchers, the AI themes' next test would be Anthropic's IPO. The company filed its S1 registration statement with the U.S. Securities and Exchange Commission (SEC) on October 26, 2026, and later amended it on 2nd November. The frontier model firm also disclosed over $890 billion in committed spending largely for computing power and infrastructure, with nearly $440 billion due by 2030. These include multi-billion-dollar compute partnerships with Broadcom, SpaceXAI, Google, and Amazon, where in most cases the company is locked in to pay irrespective of usage. This comes on the back of $33.2 billion in revenue for the first nine months of 2026—a staggering 1,206% increase year-over-year from all of 2025.

Anthropic disclosed that it had over 11,900 clients spending at least a million dollars annually, though its top 5 enterprise clients still generate nearly a quarter of its total business. While the company earlier was looking at $1.5 trillion - $2 trillion in valuation, now the company could be facing an aggressive reset. While OpenAI has pushed its IPO to 2027, Anthropic’s listing could also set the base expectation for its own debut in the public markets.

On the other hand, Trump’s anti-immigration stance and heightened visa scrutiny are also showing strain on human capital. A policy paper by the National Foundation for American Policy, a non-profit, non-partisan public policy research organisation, shared a paper in June this year on ‘Immigration and Billion-Dollar Companies’. It noted that of the 775 privately held unicorns, 59% of them were founded or cofounded by immigrants, an increase from the earlier 55% in 2022.

The brief stated the collective value of the 455 immigrant-founded billion-dollar companies is $5.0 trillion. “Almost one in four U.S. billion- dollar companies, or 24%, have a founder who came to America as an international student. The research shows the importance of immigrants in cutting-edge companies and the U.S. economy at a time when U.S. immigration policies have grown more restrictive,” it said.

That aspiration of the U.S. as a destination for global innovation seems to already be waning for the next wave of talent. Data disclosed by The National Science Board in its ‘The State of U.S. Science and Engineering 2026’ report says that in 2025, China and India combined accounted for 71% of international science and engineering master’s enrollment and 44% of international S&E doctoral enrollment.

India was by far the leading source for S&E master’s students at 77,000. However, the enrollment in international S&E master’s has seen a 24% decline from 2024 to 2025, driven by a 39% decrease in S&E master’s students from India.

At a time when artificial intelligence is redefining the evolution of technology, DD Mishra, VP Analyst at Gartner, says that while in the short term, the US remains the global epicentre of AI due to massive venture capital and computational infrastructure, in the long run, however, treating high-skilled tech talent through a restrictive immigration framework risks creating a structural deficit in human capital. Pointing to a significant portion of top-tier AI researchers at leading institutions like Stanford, MIT, and Carnegie Mellon being international students, “compounding the PERM freeze with proposed additions, such as a $100,000 fee on Optional Practical Training (OPT), dramatically increases the risk that elite graduates will choose to build their careers elsewhere”. The ones at risk will be big tech firms and AI startups, which bear the immediate brunt.

If research articles are an indication, the science and engineering research publication of the 3.5 million articles in 2024 was led by China at 31%, followed by the United States at 12% and India at 7%. In fact, the report also noted that authors from two countries, China and India, were responsible for most of the growth in annual publications since 2014, while authors in the United States decreased from their peak in 2021.

With the pathway to permanent residency looking increasingly difficult and uncertainty around visas, for Indian students, the EU, especially Germany, Australia, and Singapore are increasingly becoming preferred destinations for higher STEM education. This could, in the coming years, also help these countries strengthen their own innovation ecosystem. Biswajeet Mahapatra, Principal Analyst at Forrester, says that innovation ecosystems tend to benefit from a combination of domestic expertise and global talent flows, particularly during periods of rapid technological advancement - especially in the AI age, when organisations are racing to build AI capabilities and chasing specialised skills. “While such measures may encourage greater investment in domestic talent development, the near-term risk is a tighter supply of experienced AI professionals, leading to higher talent costs and longer timelines for scaling AI initiatives,” Mahapatra adds.

In this race, the US’s loss could potentially be India’s gain, as the rest of the world. For India, these restrictive moves could provide further impetus to US firms to tap talent from India, especially given the Global Capabilities Centre boom, led by Bengaluru. Misha believes that this could help narrow the AI capability gap for other countries. "Countries with agile 'Startup Visa' programs or fast-tracked residency for technical founders are actively poaching talent that the US immigration system rejects. Instead of keeping intellectual property within the US borders, restrictive immigration forces multinational companies to open satellite AI research labs in cities like Vancouver, Toronto, London, or Bengaluru. The innovation, patent generation, and downstream economic wealth of those breakthroughs move outside the US tax and regulatory umbrella," he said.