SAN SINGAPORE — A bleak vision of an artificial intelligence–driven future—marked by mass unemployment, financial stress and economic slowdown—is rippling through global markets, unsettling investors who only months ago were enthusiastically betting on the technology’s promise.
At the center of the anxiety is a now-viral report from Citrini Research, which sketches a dystopian 2028 scenario in which unemployment climbs to 10.2% as AI rapidly displaces workers across software, logistics and delivery-related industries. The report has become the latest in a wave of widely circulated “think pieces” warning that the pace of AI disruption could overwhelm the economy’s ability to adapt.
In the Citrini scenario, widespread layoffs triggered by AI adoption are compounded by rising mortgage defaults and stress in private equity–backed loans. The resulting feedback loop, the report argues, could send shockwaves through the financial system—dragging down U.S. stocks, freezing credit markets and weighing heavily on broader economic growth.
Markets already on edge appear to be taking the warnings seriously. Investors have been aggressively selling shares of software companies and firms viewed as vulnerable to automation. The U.S. software shares index is down 24% so far this year, reflecting growing unease about how quickly AI could erode traditional business models.
“AI capabilities improved, companies needed fewer workers, white-collar layoffs increased … it was a negative feedback loop with no natural brake,” Citrini report author Alap Shah wrote.
Similar concerns have echoed through blogs and investor notes circulating this month. One widely shared post by Matt Shumer, the CEO and co-founder of Otherside AI, argues that AI’s economic impact could ultimately be “much bigger” than that of the 2020 COVID-19 crisis, which upended global supply chains, labor markets and education systems.
The accumulation of such warnings has left investors struggling to balance optimism about AI-driven productivity gains with fears of a sudden economic shock not yet reflected in traditional macroeconomic data.
“The market is uneasy,” said Damien Boey, portfolio strategist at Wilson Asset Management in Sydney. “It’s trying to reconcile cyclical signals that usually support risk assets with the possibility of a disruptive shock. The Citrini piece has struck a nerve in that context.”
Winners and Losers Take Shape
While global equity markets remain close to record highs, the headline figures mask a sharp rotation beneath the surface. Capital has been flowing out of many AI-exposed software companies and into defensive sectors—or into areas of the AI supply chain seen as direct beneficiaries of the technology boom.
Since peaking last October, the S&P 500 software and services index has fallen more than 30%. In contrast, major chipmakers in Asia have surged. Shares of TSMC are up about 30% over the same period, while Samsung Electronics and SK Hynix have roughly doubled.
“AI is real, the divergence is real, and the selloff in software makes sense,” said Christopher Forbes, head of Asia and the Middle East at CMC Markets. “AI will force software coding to go to zero. Those in the supply chain will win—chips, data centers and permanent energy.”
The next major test for markets is expected with earnings from Nvidia, widely seen as a bellwether for AI demand.
Experts Urge a Measured View
Not everyone believes the market’s reaction is fully justified. Several analysts caution that fear-driven narratives risk overlooking the broader economic benefits of AI and the ability of labor markets to adapt.
“I would take it seriously, not literally,” said Nick Ferres, CIO at Vantage Point Asset Management. He noted that criticism of the Citrini report—particularly its failure to account for economic adjustment and job creation—also deserves attention.
In his blog post, Shumer himself emphasized that workers’ greatest advantage lies in acting early—learning how to use AI tools and adapting alongside them rather than resisting the change.
In a separate commentary dated Feb. 17, Andrea Pignataro, CEO of ION Group, warned that markets should not panic over whether AI will replace software tools. Instead, he argued, institutions should worry about what happens when they realize they have been training AI systems “to play without them.”
“So far this year, the stock market has been discounting a scenario in which AI is our Frankenstein monster,” said Ed Yardeni, president of Yardeni Research. “We continue to believe that AI is augmenting workers’ productivity rather than making them extinct.”
