This EO doesn't take away funding that was already granted. However, research labs constantly have to reapply for new grants and the agencies that approve them do have to follow EOs. It would be stupid to risk the future of your research, that could save lives, and the employment of your entire lab by not writing your grants in a way that would maximize the chance they get approved.

Maybe after a year or two a lawsuit could reverse the goverment not funding research using "AI" instead of "SI" but it would not be as straightforward as EOs that try to pull funding alloted by congress. By the time that happens their lab will already be shut down and several scientist's carrers would be destabilized. Its not something PIs can just ignore.