Citrini Research warns of an economic collapse due to AI advancements, causing a stock sell-off in tech and payment sectors.
Citrini Research has issued a stark warning of a looming economic collapse driven by advancements in artificial intelligence, prompting a significant sell-off in stocks related to software and payment services.
The report, titled "Global Intelligence Crisis," has attracted considerable attention with over 24.4 million views on X. It posits that while AI has the potential to enhance corporate profitability, it simultaneously threatens to render human jobs obsolete, potentially leading to a recession.
Forecasts for June 2028 paint a bleak picture:
- The S&P 500 index is projected to have dropped by 38% from its peak;
- Unemployment rates are expected to exceed 10%;
- The private credit market is predicted to be in turmoil;
- Mortgage agreements are anticipated to be under severe strain.
The report outlines a gradual process that could lead to this dire scenario:
- Early layoffs may initially seem beneficial, boosting market margins and profit while reducing wages.
- As AI agents advance, they could replicate products quickly, applying pressure on prices and revenue.
- AI assistants might disrupt traditional business models by utilizing cheaper payment methods like stablecoins.
- Increased unemployment could lead to diminished consumer spending.
- Loan defaults could negatively impact the insurance sector.
- Challenges in the mortgage market may worsen asset sell-offs.
- Decreased tax revenues could lead to proposals for taxes on AI-generated profits.
Stock Market Reactions
In response to these developments, IBM shares suffered their largest decline in 25 years, plummeting by 13.1%. Other tech giants also faced losses, with Microsoft, Oracle, and Accenture seeing drops of 3.21%, 4.57%, and 6.58%, respectively. Payment processors like Visa, Mastercard, and American Express experienced declines between 4% and 7%.
Investor anxiety heightened following Anthropic's announcement that its AI, Claude, can optimize COBOL code, primarily used in IBM systems, leading to fears about job security in the tech sector.
Citrini experts caution that the rise of AI technologies, such as Anthropic's Claude Code and OpenAI's Codex, signals a significant economic shift. The reduced need for human labor could compel companies to reinvest savings into even more advanced systems, creating a cycle that exacerbates workforce displacement and diminishes consumer spending.
Additionally, in February, shares of major public cybersecurity firms declined after the introduction of an AI vulnerability scanner within Claude Code Security, further showcasing the disruptive impact of AI innovations.
