Software stocks crater as independent research piece details potential AI dystopian scenario
The lowlights in this dystopian not-too-distant future: unemployment high despite elevated nominal growth and productivity, and the stock market tumbling as credit stress from companies laid low by AI metastasizes.
Software stocks are getting shellacked as a post published by Citrini Research and Lotus Technology Management managing partner Alap Shah has sharpened attention on the magnitude and breadth of losers from the AI boom.
The piece, titled “The 2028 Global Intelligence Crisis,” is a hypothetical scenario analysis exploring the left-tail risks in two years’ time in a world where there’s an aggressive AI build-out and adoption of AI agents.
“What follows is a scenario, not a prediction,” the authors wrote. “Hopefully, reading this leaves you more prepared for potential left tail risks as AI makes the economy increasingly weird.”
The original tweet with a link to the piece from Citrini Research, which was founded by James van Geelen, has received 4.5 million views, been retweeted 2,100 times, and bookmarked 12,000 times, per X. Van Geelen’s profile is also among the top two most viewed on the Bloomberg Terminal over the past hour, as of 11 a.m. ET, recently surpassing baseball legend Yogi Berra (?!?).
“What if our AI bullishness continues to be right... and what if that’s actually bearish?” they wrote.
The lowlights in this dystopian not-too-distant future: unemployment high despite elevated nominal growth and productivity, and the stock market tumbling as credit stress from companies laid low by AI metastasizes.
The hypothetical pain points for the software industry include:
Software-as-a-service companies forced to offer steep discounts to customers for 2027 renewals to avoid being displaced by new AI tools;
And “systems of record” like ServiceNow issuing dire results and job cuts as the potential for in-house builds weigh on growth and pricing.
CrowdStrike, DocuSign, AppLovin, Atlassian, GitLab, Workday, Datadog, Asana, Salesforce, Oracle, Adobe, ServiceNow, and Palantir are among the names getting crushed on Monday.
A future in which AI agents thoroughly conquer e-commerce, handling transactions on behalf of humans, could also leave payments companies vulnerable, the authors added.
Mastercard, Visa, American Express, Synchrony Financial, and Capital One are stocks that are all suffering from severe selling pressure on Monday which were flagged in the scenario analysis as facing headwinds from agents looking to avoid fees and white-collar workers being displaced.
Do read the entire piece here. It’s often remarked that a lack of discipline is a surefire sign of a poor investor, but in my opinion — and personal experience! — a lack of imagination can be just as much of a shortcoming. Having the open-mindedness and creativity to envision what could happen while developing and stress-testing your assumptions can often be a very helpful way to identify opportunities in financial markets.
