Multiple sectors of the US stock market collectively plummeted during trading, triggered by a hypothetical AI report sparking a sell-off wave

Citrini Research released a report earlier this week, detailing the potential risks that artificial intelligence (AI) could pose to various sectors of the global economy, leading to significant declines in restaurant delivery, payment, and software stocks on Monday.

DoorDash, American Express, KKR & Co Inc., and Blackstone all saw intraday drops of over 8% on Monday. Other companies mentioned in the article, including Uber, Mastercard, Visa, Capital One, and Apollo Global Management Inc., also declined by at least 3%.

The report, published on Sunday, states in its preface:

“The sole purpose of this paper is to model a scenario that has previously received limited in-depth exploration. After reading, we hope you will be prepared for the potential tail risks that come with AI making the economy increasingly ‘strange.’”

Citrini Research was founded by James van Geelen. The report sets up a hypothetical scenario for June 2028. In this scenario, disruptive AI impacts lead to mass white-collar unemployment, decreased consumer spending, defaults on software-supported loans, and an economic contraction. However, the report also emphasizes: “The following is merely a scenario, not a prediction.”

In this “thought experiment,” Citrini depicts various possible outcomes, including one where the dominance of food delivery apps like DoorDash and Uber Eats is replaced by so-called “vibe-coded” (atmosphere programming) alternatives.

DoorDash co-founder Andy Fang responded to the Citrini report on X (formerly Twitter):

“We do believe that agent-based business models will bring disruptive change to the industry. The ground is shifting, and we must adapt.”

The report also describes another future scenario: AI agents help users save money by eliminating transaction fees charged by payment processors like Mastercard and Visa.

The report states:

“We recognize that some of these scenarios may not actually occur. As investors, we still have time to assess how much of our portfolio is built on assumptions that may not hold up over the next decade.”

AI panic has previously triggered sell-offs across multiple sectors

Media reports indicate that the dark portrayal in this report has heightened anxiety in the stock market, which has already been volatile recently due to AI disruption risks and geopolitical instability.

Thomas George, portfolio manager at Grizzle Investment Management, said:

“This report indeed raises realistic concerns about disruption risks, even if things don’t necessarily develop into the worst-case scenario. After reading it, you definitely won’t feel great. I believe anyone holding these stocks will become less confident.”

In recent weeks, sectors ranging from software and wealth management to logistics have experienced sell-offs. Investors are nervous about the potential impact of new AI tools, adopting a “shoot first, ask questions later” approach.

While software companies are hit hardest, insurance brokers, private credit firms, cybersecurity companies, and even real estate services stocks have also been caught up in what’s called the “AI panic trading.”

However, some analysts, strategists, and investors warn that many market reactions are exaggerated and that the risks associated with AI may be overestimated at present.

Michael O’Rourke, chief market strategist at Jonestrading, said:

“This is a very surprising market reaction. I’ve seen markets show remarkable resilience in the face of real negative news. Yet now, a completely fictional piece has caused the market to spiral into a free fall.”

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