AI "Horror Story" Once Again Drains Blood from U.S. Stocks: A 2028 "Fictional" Essay Sparks Panic, IBM Plunges to 25-Year Low

On Monday, the artificial intelligence (AI) “panic trading” erupted again, with concerns about AI’s disruptive power intensifying, dragging down the stocks of courier, payment, and software companies, and causing IBM (IBM.US) to record its largest single-day decline in 25 years.

The sell-off was triggered by a pessimistic report released over the weekend by a small firm called Citrini Research. The report outlined potential risks AI could pose to various sectors of the global economy by setting up a hypothetical future scenario. According to the report, the scenario is set in June 2028, where AI’s disruptive impact leads to mass white-collar unemployment, decreased consumer spending, loan defaults supported by software, and an economic contraction.

The report states: “The sole purpose of this paper is to model a scenario that has been relatively underexplored so far. We hope that after reading it, you will be prepared for the potential tail risks of AI making the economy increasingly ‘strange.’” However, it also emphasizes: “What follows is merely a scenario, not a prediction.”

Notably, Citrini specifically highlighted that food delivery services and credit card companies could face difficulties. The report assumes that dominant food delivery apps like DoorDash (DASH.US) and Uber Eats will be replaced by so-called “vibe-coded” solutions, and AI agents will help users save money by eliminating transaction fees charged by payment processors such as Mastercard (MA.US) and Visa (V.US).

The stocks of several companies named in the Citrini report fell sharply. DoorDash, American Express (AXP.US), KKR (KKR.US), and Blackstone (BX.US) all declined by at least 6%, while Uber (UBER.US), Mastercard, Visa, Capital One (COP.US), and Apollo Global Management (APO.US) each dropped more than 4%.

Amid recent weeks of market volatility driven by AI disruption fears and geopolitical unrest, the bleak scenario painted by Citrini has added more anxiety to the stock market. Thomas George, portfolio manager at Grizzle Investment Management, said: “Even if the worst-case scenario doesn’t materialize, the concerns about disruption raised in the report are real. It won’t leave anyone feeling good after reading it, and I believe anyone holding these stocks will lose confidence.”

Later, AI startup Anthropic announced on Monday in a blog post that its Claude Code tool can help modernize COBOL — an outdated programming language primarily used on IBM computers.

A significant portion of IBM’s revenue still comes from its mainframe business, which runs some COBOL-based applications on large servers owned by clients. Anthropic stated that Claude Code can automate the most complex exploration and analysis tasks involved in COBOL modernization, “AI is good at simplifying those tasks that once made COBOL modernization prohibitively expensive.”

As a result, IBM’s stock fell 13.15% on Monday, its largest single-day decline since 2000. This indicates that the company has become the latest to face heavy pressure due to fears that AI will dampen growth prospects for traditional businesses.

Finally, Nassim Taleb, known as the “Black Swan” father, issued a warning. He stated that as the AI-driven rally enters a more fragile phase, investors should prepare for increased volatility and even bankruptcies in the software industry. Taleb believes the market underestimates structural risks and overestimates the durability of today’s leading AI companies. He warned that while AI will generate huge profits, history shows early pioneers are often replaced. He added that with technological instability, intensifying competition, and geopolitical shifts reshaping the industry, the likelihood of some software companies going bankrupt is high.

Over the past few weeks, investors have been nervous about the potential impact of new AI tools, adopting a “shoot first, ask questions later” approach. Besides the software sector, which has been hit hardest, insurance brokers, private credit firms, cybersecurity companies, and even real estate service stocks have been caught up in what is called “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 an incredible market reaction. I’ve seen the market show remarkable resilience in the face of actual negative news. Yet now, a fictional piece has caused the market to plummet uncontrollably.”