🤖 Dystop-AI-n

Software stocks got shellacked yesterday as a post published by Citrini Research and Lotus Technology Management managing partner Alap Shah 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 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 weighs on growth and pricing.

“What if our AI bullishness continues to be right... and what if that’s actually bearish?” the authors added. Stocks that finished between 8% and 12% down on the day included CrowdStrike, AppLovin, Atlassian, GitLab, Datadog, and Asana. 

The Takeaway

Anyway, the market seemed genuinely spooked by the “scenario.” 

The original tweet with a link to the piece from Citrini Research, which was founded by James van Geelen, has received 6.5 million views, been retweeted over 2,600 times, and bookmarked 15,000 times just after market close on Monday, per X, and van Geelen’s profile was among the most viewed on the Bloomberg Terminal. 

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The performance gap between the tech sector’s winners and losers has reached the 100th percentile, widening to levels not seen since 2000.

That’s according to Jeff deGraaf, head of technical research at Renaissance Macro Research, who flagged in a note to clients the magnitude of this divergence in fortunes within the industry.

• The story of the technology trade in 2026 was made clear on the first trading day of the year, with a record outperformance of semiconductor stocks versus their software counterparts.

• Since then, software has continued to flounder as new AI tools pull the timetable for potential disruption forward and threaten to undermine the perceived safety of the software industry’s recurring revenue streams and margins. 

• Within the hardware space, the list of winners has become even narrower, with investors focused on data center capex beneficiaries, particularly in memory and semicap equipment.

Year to date, the best performers in the Russell 1000 Technology Index (and presumably the best charts) include Sandisk, Western Digital, Corning, Vertiv Holdings, Micron, and Applied Materials.

The Takeaway

“To see similar levels of performance differential between winners and losers requires a trip back to 2000 as the dot-com bubble was bursting and the semis were holding up relative to the speculative internet related names,” deGraaf wrote. “Beware chasing good charts in technology, and at the margin, reduce exposure.”

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As we noted last year, the sheer scale of OpenAI’s cash burn plans have been unlike anything we’ve ever seen. And we now know the company’s cash burn forecasts are actually even more insane than we previously thought. Following a report from The Information that Project Stargate is a “chaotic mess,” the outlet also reported that OpenAI expects to burn through $218 billion between 2026 and 2029.

See how it compares to Uber, Netflix, and Tesla

• 🎬 Best Picture: “One Battle After Another” saw its chances of winning Best Picture at the British Academy Film Awards rise slightly to 78% according to prediction markets* after yet another win on Sunday. 

• 🎬 Best Supporting Acting: But if the BAFTAs affirmed the narrative in Best Picture, in many of the acting categories things only got more chaotic, especially in Best Actor. Meanwhile, Wunmi Musaku (“Sinners”) saw her odds shoot up from 3% to 26% for a win in Best Supporting Actress, while Sean Penn (“One Battle After Another”) saw his chances rise from 14% to 59% for a win in Best Supporting Actor, at the expense of Stellan Skarsgard, who saw his chances halve from 66% to 27%. 

• 📊 Fed: After better-than-expected employment numbers, the chances of a rate cut at the Fed meeting in March have dwindled down to just 5%, prediction markets show.

*Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.

• February Consumer Confidence 

• Earnings expected from Alibaba, AMC, Home Depot, Keurig Dr Pepper, Cipher Mining, Axon, American Tower, Tempus AI, Zeta, Workday, and HP