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Citrini Research’s has called its report titled \u2018The 2028 Global Intelligence Crisis\u2019, a \u201cscenario, not a prediction\u201d, that aims to prepare readers \u201cfor potential left tail risks as AI makes the economy increasingly weird\u201d.<\/p>\n<\/div>\n
The report itself claims to be a thought experiment \u201cdetailing the progression and fallout of the Global Intelligence <\/a>Crisis\u201d. Hypothetical as it is, the original post on social media platform X (on Monday) has garnered over 12,000 likes, more than 8,000 reposts and views in the excess of 8.2 million, till time of writing.<\/p>\n<\/div>\n Alap Shah, chief investment officer at Lotus Technologies is among the co-authors of the viral research report.<\/p>\n<\/div>\n The study hypothesis a 2028 world with advanced machine intelligence that will render a number of human jobs obsolete, triggering massive layoffs<\/a>, collapsing consumer spending and dragging down stock indexes like the S&P 500.<\/p>\n<\/div>\n It further notes that loss of jobs creates a \u201cnegative feedback loop with no natural brake\u201d where companies cut jobs because they need fewer workers, displaced workers spend less, margins tank and companies more in AI, which leads to more job losses\u2026 and so it goes on.<\/p>\n<\/div>\n Through the course of the paper the emphasis is on how peaking markets and healthy economy are two different things. \u201cIn every way AI was exceeding expectations, and the market was AI. The only problem\u2026 the economy was not,\u201d it notes.<\/p>\n<\/div>\n What this means is that the markets can celebrate AI companies<\/a> and their successes without worrying over real world application or impact of the output. But the economy gauges metrics such as consumer spending, inflation and jobs \u2014 all set to be negatively impacted by AI.<\/p>\n<\/div>\n Service heavy sectors such as food delivery, finance, financial advice, insurance, mortgages<\/a>, real estate, software, travel services, are seen at highest risk. Further, it noted that sector risks will turn into systemic risks and recession \u2014 by virtue of it being a loop, not a cycle.<\/p>\n<\/div>\n \u201cLabor displacement, mortgage concerns, private market turmoil. Each reinforces the other,\u201d it added, noting that the \u201csystem wasn\u2019t designed for a crisis <\/a>like this\u201d.<\/p>\n<\/div>\n “The economy can find a new equilibrium. Getting there is one of the few tasks left that only humans can do. We need to do it correctly\u2026 As investors<\/a>, we still have time to assess how much of our portfolios are built upon assumptions that won’t survive the decade. As a society, we still have time to be proactive,” the paper concluded.<\/p>\n<\/div>\n The paper gained traction online and as the fear spread, markets <\/a>reacted. The S&P 500 fell 1% while an exchange-traded fund focused on software tumbled 4.8%, bringing its drop from a peak in September to around 35% \u2014 International Business Machines Corp. saw its worst drop in 25 years, Bloomberg reported.<\/p>\n<\/div>\n According to a Business Insider report, the Dow crashed over 800 points around midday after the report released on Monday, and the Nasdaq fell more than 1%. Biggest losers were software names including AppLovin, Asana, DocuSign, and Zscaler, which saw sharp declines each, it added.<\/p>\n<\/div>\n \u201cWe are entering a really highly volatile time in the markets,\u201d Shah told Bloomberg, adding that he expects more market swings in the near term, including in software companies (which are likely to see longer term impact).<\/p>\n<\/div>\n According to the report, amid widespread artificial intelligence fueled disruption, Asian companies, especially semiconductor <\/a>maker, are likely to emerge as the ultimate winners by 2028. It noted that the continent homes majority of the global chipmakers, semiconductor foundries and assemblers<\/p>\n<\/div>\n Speaking to Bloomberg TV, Shah said that data centres, foundation labs and semiconductors are the key sectors set to benefit. \u201cClearly semiconductors are huge winners. Things that are upstream to semiconductors are huge winners \u2014 so everything required to construct a data center<\/a>,\u201d he said.<\/p>\n<\/div>\n He identified two sectors that will \u201caccrue\u201d gains from AI \u2014 materials and tech. The Bloomberg report noted that stocks of Taiwan Semiconductor Manufacturing Co. (TSMC<\/a>), Samsung Electronics Co. and SK Hynix, MiniMax Group Inc., and Knowledge Atlas Technology JSC have more than doubled this month.<\/p>\n<\/div>\n On the disruption caused due to AI, Shah noted that AI is likely to cut white collar jobs by 5% over the next 18 months, with the United States banking <\/a>and insurance sectors taking the majority hit. and suggested that imposing an AI tax would \u201ccushion\u201d job losses, as per another Bloomberg report.<\/p>\n<\/div>\n \u201cGovernments should consider taxing incremental or windfall gains from AI to offset worker displacement and protect consumer demand,\u201d he said.<\/p>\n<\/div>\nScenario: \u2018The 2028 Global Intelligence Crisis\u2019<\/h2>\n
Markets hit by \u201cnon-prediction\u201d panic: What happened?<\/h2>\n
Why is Asia, Asian stocks the winners?<\/h2>\n
How to deal with AI disruption?<\/h2>\n