Citrini Research report rattles markets as AI fears deepen tech sell-off
A speculative research note imagining an AI-driven economic downturn caused a sharp sell-off in US tech stocks on Monday, adding to pressure already building from new AI tools.
The Dow Jones Industrial Average fell 821.9 points on Monday, or 1.7 per cent, while the S&P 500 declined 1 per cent and the Nasdaq Composite slipped 1.1 per cent.
The tumble followed a substack post by New York-based Citrini Research titled ‘The 2028 Global Intelligence Crisis’.
The piece was written as a fictional market dispatch from June 2028 and explicitly described as a “scenario, not a prediction.”
Nevertheless, it circulated widely across trading desks and social media over the weekend, adding to broader trade uncertainty and bubbling concerns about the pace and impact of AI disruption in the wake of Anthropic’s new AI tool earlier this month.
A hypothetical downturn
Citrini’s memo describes an unsettling future in which rapid AI adoption drives mass white-collar job losses, weakens consumer spending and ultimately contributes to a 38 per cent peak-to-trough fall in the S&P 500 from October 2026 highs.
It projects a US unemployment rate of 10.2 per cent in the scenario, which is over double that of 4.3 per cent recorded last month.
The report writes that businesses built on transaction fees or ‘friction’ could face margin pressure if AI agents reduce the need for third party entities.
It also alarmingly suggests enterprise software costs could come under strain if AI coding tools allow companies to replicate features internally.
Several of the companies mentioned in Sunday’s report saw their shares decline sharply in the day that followed.
Payments groups Visa and Mastercard toppled, while delivery and ride-hailing platforms also dropped. Private capital firms with bigger exposure to software-backed loans were also pulled lower.
Reuters reported that private equity and private credit groups were caught up in Monday’s sell-off, as concerns around AI’s disruption to software revenues continues.
New AI tools add to pressure
However, the market move wasn’t driven solely by the note. On Monday, AI start-up Anthropic published yet another Claude tool, made to assist a legacy programming language called COBOL, widely used in banking systems.
According to the tech behemoth, COBOL continues to underpin parts of financial infrastructure, including the majority of American ATM transactions.
IBM, a major provider of mainframes and related services tied to COBOL systems, fell 13.2 per cent following the announcement, its steepest one-day drop since 2000.
Shares in consulting and IT services companies with exposure to legacy modernisation work also dropped in the same time frame.
The announcement followed a series of AI updates from Anthropic in recent weeks that have caused a major software sell-off.
Analysts at UBS noted that coding has become “the first domain where AI demonstrably outperforms humans at scale,” increasing pressure on parts of the software sector.
Wider market fragility
The concerns coincide with already volatile markets amid shifting US tariff policy, after Donald Trump moved to replace recently invalidated trade measures with new global tariffs under a separate legal authority.
At the same time, valuation metrics have drawn attention; the S&P 500’s cyclically adjusted price-to-earnings ratio recently exceeded 40, a level reached only rarely in modern history.
In the UK, the House of Commons Treasury Committee recently warned that financial regulators risk falling behind rapid AI deployment in financial services and called for clearer accountability frameworks.
Citrini’s authors characterised their report as a mere “thought exercise”, intended to explore potential risks from rapid AI progress.
But the note’s ability to move markets points to investor sensitivity to the effects of automation, especially in fields where pricing power depends on inter-mediation.