Nervous stock markets: Thought experiment about AI causes tech stocks to tumble
A small analysis firm publishes a bleak scenario of how AI could cause the economy to crash. This causes the prices of numerous tech stocks to fall.
(Image: Artit Wongpradu / Shutterstock.com)
Nervousness in the stock markets is increasing due to the AI hype. A scenario published on Sunday by the small analyst firm Citrini Research, which fictitiously describes significant negative effects of AI on the US economy in 2028, may have triggered sell-offs of numerous tech stocks.
Citrinis thought experiment depicts a downward spiral triggered by companies increasingly relying on AI instead of human knowledge work. After initial productivity gains and record stock prices, the scenario shows the macroeconomic consequences: a large portion of knowledge workers and office employees lose their jobs and have to switch to significantly lower-paying jobs. The loss of many well-paid jobs leads to rapidly falling consumer spending, which also affects other companies in traditional economic sectors.
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The real estate markets are also starting to falter, as many people can no longer service their mortgages due to job losses. As tax revenues also decline with the jobs, the state's intervention options are simultaneously limited. Considering the increasing crisis, companies are resorting to cost-saving measures, which means even more AI use and layoffs – and thus a further worsening of the situation. This is Citrinis bleak picture, and no one can say yet whether it will come true in 2028 or is simply science fiction.
From thought experiment to stock market crash
Nevertheless, according to the Wall Street Journal, the doomsaying had an effect on investors and pulled down sectors and companies mentioned in the Citrini scenario. In addition to software stocks from Microsoft and ServiceNow, credit card providers Visa, Mastercard, and American Express, mentioned as losers, were hit with significant daily losses. Equity firms listed, such as KKR and Blackstone, also suffered considerably.
IBM was hit particularly hard on Monday with a minus of 13 percent. In February alone, IBM stock lost more than 26 percent of its value. Big Blue did not feature in Citrinis future vision but may have been dragged down by a statement from Anthropic. The major competitor to OpenAI announced the ability of its AI tool Claude Code to significantly accelerate modernization projects for COBOL code. According to Anthropic, a COBOL codebase can now be modernized in quarters thanks to AI, instead of years as before. Recently, fears that AI could disrupt certain industries and make companies obsolete have repeatedly led to stock market crashes, including in the area of SaaS providers.
(axk)
