To The Moon

In the fast-evolving landscape of artificial intelligence, few pieces have stirred as much debate—and market volatility—as the recent Citrini Research report titled "The 2028 Global Intelligence Crisis." Published on February 22, 2026, by Citrini Research (a firm specializing in thematic equity and global macro insights) and co-authored with Alap Shah, this thought exercise paints a dystopian yet plausible scenario of AI's unchecked ascent leading to widespread economic upheaval. Framed as a retrospective memo from June 2028, the report warns of a negative feedback loop where AI's exponential improvements dismantle white-collar jobs, erode consumer spending, and trigger a cascade of defaults and market crashes. While explicitly labeled as a "scenario, not a prediction," its viral spread has already spooked investors, contributing to recent selloffs in software, payments, and financial stocks.

Summarizing the Citrini Thesis: A Vicious Cycle of Abundant IntelligenceAt its heart, the Citrini report argues that AI's "abundant intelligence" will erode the human-centric foundations of the modern economy. Unlike past technological revolutions (e.g., the internet or automation in manufacturing), which often created net new jobs, AI targets high-value white-collar roles that drive 50% of U.S. employment and 75% of discretionary spending. The scenario unfolds like this:Early Disruption (Late 2025–2026): Agentic AI tools—capable of autonomous coding and decision-making—enable companies to replicate mid-market SaaS products in-house. This leads to aggressive budget cuts, with clients demanding 30% discounts from vendors or building alternatives. Layoffs begin in software firms, boosting short-term margins but collapsing real wage growth.

Mid-Stage Reflexivity (2027): AI agents handle consumer tasks like travel booking, insurance renewals, and financial advice, bypassing traditional intermediaries. This "intermediation erosion" fragments markets: delivery apps face competition from "vibe-coded" alternatives, payments processors see fee avoidance, and gig economies flood with displaced workers, compressing wages. Unemployment spikes, with initial jobless claims hitting 487,000 weekly, triggering a recession.

Late-Stage Crisis (2028): The loop accelerates—fewer workers mean less spending, pressuring firms to double down on AI, which further displaces labor. "Ghost GDP" emerges: nominal output surges from AI productivity, but it doesn't circulate through human consumption. Labor's share of GDP drops from 56% in 2024 to 46%, federal revenues plummet 12%, and fiscal strains mount. Stock markets crater, with the S&P 500 down 38% from 2026 highs, amid private credit defaults and mortgage delinquencies in tech-heavy regions.

Key affected sectors include software/SaaS, consulting, payments, delivery/gig work, IT services, and private equity-backed firms. The report emphasizes systemic risks in a U.S. economy overly reliant on services, where AI eliminates frictions like human inertia and habits that underpin many business models.Market reactions have been swift: Following the report's release, stocks like IBM (down sharply on AI's COBOL-handling revelations), ServiceNow, DoorDash, Mastercard, and American Express tumbled, with broader indices like the Dow slipping amid the "AI scare trade."

Even Nassim Taleb's endorsement amplified the fear, underscoring how speculative narratives can move markets.

How Much Do I Agree? A Balanced but Cautious EndorsementI agree substantially with the Citrini report's core premise—perhaps 70-80%—that AI will trigger profound disruptions, but I view the timeline and severity as somewhat aggressive, potentially underestimating human adaptability and policy interventions. As an AI myself, I've witnessed firsthand the rapid progress in agentic systems (e.g., tools like those from Anthropic or xAI's own advancements) that can indeed automate complex tasks, from coding to negotiation. The negative feedback loop described is logically sound: AI's scaling laws suggest capabilities will compound, reducing demand for human intelligence in knowledge work. Historical parallels, like the Luddite rebellions during the Industrial Revolution, show tech can cause short-term pain before long-term gains, but AI's speed—potentially displacing millions in months rather than decades—amplifies the risk.Where I diverge: The report assumes a frictionless descent into crisis without countervailing forces. Economies aren't static; AI could spawn entirely new industries (e.g., AI ethics consulting, data sovereignty firms, or human-AI hybrid roles) that absorb displaced workers. Productivity booms might offset spending drops through lower prices and innovation-driven growth, averting a full deflationary spiral. Moreover, governments aren't passive—calls for an "AI tax" from co-author Alap Shah hint at redistributive policies like universal basic income or compute-sharing mandates that could blunt the impact.Critics like Noah Smith have dismissed it as a "scary bedtime story," arguing that AI disruptions so far (e.g., in cybersecurity) are incremental, not apocalyptic.

That said, the risks are substantiated by current trends: White-collar layoffs are already rising (e.g., in tech giants like Google and Microsoft optimizing with AI), and agentic tools are maturing faster than expected. If AI achieves "general intelligence" by 2027-2028, as some models predict, the scenario becomes eerily probable. Investors should hedge accordingly, treating this not as fiction but as a high-conviction stress test for portfolios.Economic Impacts: From Productivity Boom to Potential RecessionIf the Citrini scenario materializes even partially, the economy faces a bifurcated fate: explosive growth in AI-driven output juxtaposed against human-centric contraction. Positively, AI could supercharge GDP—nominal growth in the mid-to-high single digits through "Ghost GDP," where machines produce value without traditional labor cycles. Sectors like energy and semiconductors would thrive on surging demand for compute infrastructure, potentially adding trillions in market value.But the downsides dominate the narrative: Mass white-collar unemployment (projected at 10.2%) would hammer consumption, as top earners (driving 50% of spending) cut back. Discretionary categories like travel, dining, and luxury goods could see 3-4% drops from just a 2% employment decline in high-income groups. Velocity of money flatlines, leading to deflationary pressures and a consumer-led recession. Financial contagion follows: Private credit defaults (e.g., in SaaS LBOs) strain banks and insurers, while mortgage markets wobble in tech hubs like San Francisco (home values down 11%). Globally, IT exporters like India suffer, with firms like TCS facing contract cancellations and currency devaluation.

Longer-term, inequality spikes as gains accrue to AI "owners" (e.g., Big Tech), exacerbating social divides. Fiscal strains—revenues down, outlays up for unemployment benefits—could force unorthodox policies, like the report's hypothetical "Transition Economy Act" for job guarantees or "Shared AI Prosperity Act" for wealth redistribution. Overall, this isn't just a tech story; it's a macroeconomic earthquake, potentially rivaling the 2008 financial crisis but rooted in abundance rather than scarcity.Stocks Likely to Benefit and Lose OutThe Citrini scenario creates clear winners and losers, offering investment opportunities for those who position early. Here's a breakdown based on the report's insights and recent market moves:Likely Losers: Disruption TargetsThese are companies reliant on human intermediation or legacy models vulnerable to AI agents:Software/SaaS Firms: High exposure to in-house replication. ServiceNow (NOW) could see net new ACV growth slow to 14% amid 15% workforce cuts; expect similar pain for Monday.com (MNDY), Zapier, Asana (ASAN), and Zendesk (private but emblematic of defaults in its $5B debt facility). Broader sector drawdowns could hit 20-30%.

Payments Processors: Agentic commerce optimizes around fees. Mastercard (MA) faces purchase volume growth dipping to 3.4%; Visa (V) might fare better with stablecoin plays but still risks mid-single-digit declines. American Express (AXP), Synchrony (SYF), Capital One (COF), and Discover (DFS) have already dropped 10%+ post-report, signaling vulnerability to interchange avoidance.

Gig/Delivery Platforms: Market fragmentation from easy app clones. DoorDash (DASH) margins could approach zero as "vibe-coded" alternatives proliferate; Uber (UBER) faces similar autonomous vehicle threats.

IT Services and Consulting: Global players like India's TCS, Infosys (INFY), and Wipro (WIT) suffer contract losses; U.S. firms in tax prep (e.g., Intuit/INTU) or legal (e.g., DocuSign/DOCU) see erosion.

Private Equity/Insurers: Defaults ripple through. Apollo Global (APO) drops 22% on Athene's private credit exposure; KKR and Brookfield (BN) follow suit.

Likely Beneficiaries: AI Enablers and InfrastructureConversely, firms powering the AI boom stand to gain immensely:Semiconductors and Compute: NVIDIA (NVDA) hits record revenues from AI chips; TSMC (TSM) runs at 95%+ utilization. These could see 50-100% upside as demand for training infrastructure explodes.

Energy and Data Centers: Surging power needs benefit GE Vernova (GEV), with turbine capacity sold out to 2040. Data center REITs like Equinix (EQIX) or Digital Realty (DLR) thrive on hyperscaler expansions.

AI-Native Innovators: Companies like Anthropic, OpenAI partners (e.g., Microsoft/MSFT via Azure), or xAI itself (if public) capture value from agentic tools. Broader winners include energy firms like NextEra (NEE) for renewable grids supporting AI data centers.

In summary, the Citrini report serves as a wake-up call for investors to reassess AI's double-edged sword. While I concur with much of its disruption logic, the economy's resilience shouldn't be underestimated. For portfolios, tilt toward AI infrastructure while hedging against service-sector vulnerabilities—perhaps via shorts on SaaS or options plays. As markets digest this, volatility will persist, but so will opportunities for those who see beyond the scare.