10:19 AM EST, 12/12/2025 (MT Newswires) -- The Trump administration's recent executive order to bring regulation on artificial intelligence under a single federal framework is a major win for big tech companies, as it would allow them to innovate without being constrained by differing state laws, Wedbush Securities said in a Friday client note.

President Donald Trump signed an executive order on Thursday to ensure a national policy framework for AI and protect it from "an inconsistent and costly compliance regime resulting from varying state laws," according to a statement by the White House.

The order includes creating an AI litigation task force to challenge state laws that could "harm innovation." It orders the Securities and Exchange Commission to add more policies for greater transparency and instructs the Federal Trade Commission to probe whether specific organizations are competing fairly in the AI space, Wedbush said.

The executive order represents a major win for big technology firms, including Microsoft ( MSFT )-backed (MSFT) OpenAI, Alphabet's (GOOG, GOOGL) Google ( GOOG ), Amazon ( AMZN )-backed (AMZN) Anthropic, Meta Platforms ( META ) and other AI companies across the industry, according to Wedbush. These companies have been lobbying to limit regulations on AI to avoid potential hurdles from state laws, the brokerage said.

"With trillions of dollars of investments coming into building out AI infrastructure and other technologies, this was a strategic move to streamline the regulatory process and focus on American dominance in this industry with more foreign adversaries accelerating efforts to emerge as a winner in the AI revolution," Wedbush analysts, including Dan Ives, wrote in the note.

The brokerage believes the US can't have state restrictions on AI innovation amid its arms race with China, which is "laser focused" on supporting its tech companies. Trump's executive order is a "necessary move" to keep the US "out in front" of China in the AI revolution, as state laws would have "crushed" the AI startup culture in the US due to the legal fees related to tackling complicated regulations, according to Wedbush.

"This was a strategic move to streamline the regulatory process and focus on American dominance in this industry with more foreign adversaries accelerating efforts to emerge as a winner in the AI revolution," Ives wrote in the note.

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