Democrats are seeking to weaponize AI in four competitive House races, launching a $4 million ad campaign to attack GOP incumbents based on new polling data shared exclusively with Axios.

Why it matters: The midterms have been called the first AI election, and the new campaign is one of a few key tests of how deeply voter anxiety over the revolutionary technology will sway outcomes at the ballot box.

Driving the news: The Democratic group Tomorrow Together plans to run ads calling out Republicans in swing districts in Wisconsin, Arizona, Pennsylvania and Michigan for a 2025 vote they cast to block state AI regulations.

• The attack is based on new polls showing that voters are more concerned about efforts to block state AI regulation than they are about data center controversies.
• The data points to a shift in voter sentiment around AI. While previous polls showed that Americans were unsure which political party to trust, surveys of the four districts showed a significant advantage on the issue for Democrats.
• Voters trust Democrats over Republicans to hold AI executives accountable by a margin of seven to 10 points across the four swing districts, according to Workbench Strategy, which Tomorrow Together commissioned to do the surveys.
• The Wisconsin, Arizona, Pennsylvania and Michigan districts are all in presidential battlegrounds and will be a bellwether for AI issues in the midterms.

Catch up quick: The House in May 2025 passed a budget bill that included a 10-year moratorium on state-level AI regulation.

• Republican Reps. Derrick Van Orden (Wis.), Juan Ciscomani (Ariz.), Rob Bresnahan (Pa.) and Tom Barrett (Mich.) all voted in favor of the budget bill that included the moratorium.
• Widespread, bipartisan backlash quickly erupted, and on July 1 the Senate voted 99-1 to strip the moratorium from the package, including its chief sponsor, Sen. Ted Cruz (R-Texas).

The big picture: Democrats want to make AI a winning issue for them in elections.

• The Workbench Strategy data points to widespread voter skepticism of AI companies, with majorities in all four districts saying candidates' AI positions matter to their vote.
• The poll also found broad support for AI accountability measures, including making data centers cover utility costs, holding AI companies liable for harm and protecting consumers.

The bottom line: Preemption, once considered a wonky, niche policy issue, is emerging as a core theme in battleground state attack ads, an indicator of just how much AI issues may swing the upcoming election.

America is in the midst of its strongest productivity surge in decades. The evidence is more ambiguous about how much AI is the reason.

Why it matters: Companies are pouring hundreds of billions of dollars into AI, a massive bet that the technology will deliver sweeping productivity gains across the economy.

• But so far, the productivity gains may have more to do with less sexy developments, including the more intensive use of capital equipment and a post-pandemic surge in entrepreneurship now paying dividends.

What they're saying: "Translating individual productivity to organizational productivity — there's a lot of slip between cup and lip," Keith Waddell, CEO of staffing firm Robert Half, told investors last week.

• "We're not ignoring that there are productivity gains for our people, and we're getting some," he added.

S&P Global aims for roughly 2% in annual productivity gains, but it cannot isolate AI's contribution from other operational changes.

• "Some of that is directly AI. Some of that is non-AI. Most of it is actually mixed and integrated," CFO Eric Aboaf said Tuesday on the firm's earnings call.

The other side: The productivity gains are more apparent among companies developing AI.

• Anthropic disclosed in its IPO filing this week that Claude wrote more than 90% of contributions to its codebase last month.
• The average daily volume of code contributed per engineer was more than 45 times its 2024 level, according to the prospectus.

What to watch: Whether AI's benefits spread beyond tech giants and show up in broader corporate financial results.

Keep reading.

Even as AI borrowing roars on, the bond market is becoming more selective about which companies, projects and structures to finance.

Why it matters: Bond markets determine borrowing costs.

• And since the AI boom increasingly relies on debt, borrowing costs have become a key constraint.

State of play: On the surface, things have calmed down in the corporate bond market since earlier this month, when yields on bonds issued by the heavily indebted AI player CoreWeave soared. (Bond yields move in the opposite direction of their prices, so this means CoreWeave's bond prices tumbled.)

• That calm — plus the excitement over Anthropic and Meta — has helped rebuild confidence in the AI trade that is supporting the stock market.

Yes, but: A CoreWeave-shaped dent remains in the bond market.

• Prices show that investors are increasingly cognizant of the complex web of loans, ownership stakes, lease commitments and contractual obligations linking various players in the boom.
• And assets with links to the most heavily indebted players in the AI ecosystem, like CoreWeave and Oracle, are clearly seeing investors apply a chunky risk premium.

Case in point: After CoreWeave bonds tumbled two weeks ago, pushing yields on its own unsecured bonds to highs of around 16%, bonds that are financing the development of data centers that CoreWeave has leased — including those issued by developer Edged Compute and ex-bitcoin miners Core Scientific and Applied Digital — also saw yields creeping higher. (See the chart, above.)

• Likewise, the yields on the debt of data centers contracted to Oracle have moved in sympathy with swings in the price of bonds issued by the heavily indebted hyperscaler itself.
• For instance, yields on roughly $14 billion worth of bonds maturing in 2045 issued to pay for the construction of a large data center campus in Saline Township, Michigan, wobbled alongside those of Oracle over the last couple of weeks. (Oracle's signed 17-year lease for the data center is a major supporting element of the bonds, ratings agencies say.)

What they're saying: "Tenant-specific risk was exposed during the October pullback, with CoreWeave and its associated neoclouds and data centers bearing the brunt of the selloff," wrote high-yield debt analysts at Citigroup last week, adding that data center bonds "are not immune to tenant default risk and can reprice quickly as that risk escalates."

The bottom line: "We expect differentiation to persist as investors refine their views on the winners and losers of AI spending," the analysts said.

• Google and Meta are pushing back on pressure from ICE for user data. (WSJ)
• Alphabet's ad sales disappointed, leading the company to miss on revenue expectations. (Bloomberg)

Mady here again to bookend my love for NYC with a podcast rec: "Metro" with Sarah Koenig from Serial Productions. Each episode is a deep dive into New Yorkers. Stick around for the wild ride through the diamond district.