A small research firm has published a bleak scenario outlining how artificial intelligence could trigger a severe economic downturn - and the markets reacted swiftly. Following the release of the report, shares in a range of technology companies slid noticeably.
Investor anxiety around the AI boom has been building for months. On Sunday, Citrini Research released a speculative analysis describing a hypothetical chain reaction in 2028 in which widespread adoption of AI would significantly damage the US economy. Although framed as a thought experiment, the report appears to have unsettled investors and may have contributed to a wave of selling in tech stocks.
In Citrini’s scenario, companies increasingly replace human knowledge workers with AI systems. At first, productivity surges and stock prices soar. But over time, the broader consequences begin to unfold. Large numbers of office employees and skilled professionals lose their jobs and are forced into lower paying roles. As well paid positions disappear, consumer spending drops sharply, affecting not just tech firms but traditional industries as well.
The report also envisions turmoil in real estate markets, as unemployed workers struggle to meet mortgage payments. Falling tax revenues further limit the government’s ability to respond to the downturn. Companies, facing mounting pressure, double down on cost cutting and automation, accelerating layoffs and deepening the crisis. Whether this projection reflects a plausible future for 2028 or simply a work of speculation remains to be seen.
From thought experiment to market selloff
Despite its hypothetical nature, the gloomy outlook had a tangible impact on trading, according to the Wall Street Journal. Stocks in sectors highlighted in the report were among the hardest hit. Software companies such as Microsoft and ServiceNow declined, while credit card providers Visa, Mastercard and American Express - labeled as potential losers in the scenario - posted significant daily losses. Investment firms like KKR and Blackstone also saw sharp drops.
IBM was particularly affected, losing 13 percent on Monday alone. Over the course of February, the company’s stock has fallen by more than 26 percent. Although IBM was not specifically mentioned in Citrini’s projection, its decline may have been influenced by a separate announcement from Anthropic. The AI company, a major rival to OpenAI, claimed its tool Claude Code can dramatically speed up the modernization of legacy COBOL systems, reducing projects that once took years to just a few quarters. Fears that AI could disrupt entire sectors and render certain companies obsolete have repeatedly sparked selloffs in recent months, especially among SaaS providers.