Gloomy research report fuels AI debate on Wall Street
Concerns about artificial intelligence have been simmering on Wall Street for months. But this week’s reaction to a small research firm’s dire scenario that AI will lead to mass unemployment and a collapse in stock values reflects deep unrest in markets.
In a note widely shared on social media over the weekend, Citrini Research painted a bleak picture of what could happen to the economy if AI upends office work. The report described well-paid professionals forced to become Uber drivers and missed mortgage payments by displaced technicians in Seattle and Austin, Texas.
The Citrini report was cited as one of the reasons for the S&P 500’s slight decline on Monday. Although the market rebounded on Tuesday, the report continued to fuel debate among investors and policymakers about the extent of AI disruption. Some bearish investors said the report reinforced earlier warnings about AI’s threat to the economy. Others, including a Federal Reserve governor, rejected the report’s conclusions.
“The argument relies on narratives and emotions rather than concrete evidence,” Jim Reid, a strategist at Deutsche Bank, said of the report. “That doesn’t mean it will ultimately be wrong.” But he added that “the ratio of sentiment to substance is undeniably high.”
The viral nature of the research report, viewed millions of times online, appeared to prey on investor fears, curbing the gains of recent stock market leaders, leading to heavy losses at companies seen as vulnerable to AI and boosting some previously unpopular sectors.
In recent months, investors have questioned both how revolutionary AI will be in practice, undercutting the lofty earnings growth forecasts of some big tech companies, and also wondering what might happen if its impact were actually far greater.
Citrini’s study aimed to model what could happen to the economy if current high expectations about the impact of AI end up being too conservative.›
Citrini publishes macroeconomic research.
Citrini Research did not immediately respond to a request for comment.
On Monday, the S&P 500 fell 1 percent, a modest decline that masked volatility as big moves up or down in individual stocks largely canceled each other out. IBM and Datadog, another technology company, led the losses, both down more than 10 percent. Consumer staples stocks, considered safe and reliable, benefited, with Clorox, Kroger and Mondelez all rising.
By Tuesday, the S&P 500 selloff had already stopped, but the unrest beneath the surface continued.
The index rose 0.8 percent as some of the companies that had fallen the previous day bounced back up. IBM rose 3 percent and Datadog rose 1.5 percent. Expedia, the travel booking provider, rose 5 percent on Tuesday after falling 7 percent on Monday.
The fluctuations in the stock market illustrate the increasing skepticism towards the artificial intelligence narrative that has led to big gains in the stock market in recent years. According to analysts at Barclays, the S&P 500 has moved within a 2.7 percent range over the past six weeks, the most subdued move in the last century except for periods in 1964 and 1966. But individual stocks have, on average, seen moves nearly seven times larger than the index.
“This calm at the macro level masks wild swings at the micro level,” Barclays analysts wrote last week.
The S&P 500 was flat this year after rising 16 percent in 2025 and over 20 percent in 2024. The Dow Jones industrial average is slightly higher while the tech-heavy Nasdaq Composite Index is slightly lower as investors have turned away from the AI theme and toward other sectors that have lagged in recent years.
A Wall Street trading desk said in a note to clients on Tuesday that the “indiscriminate selling” of technology companies earlier in the week was similar to trading seen for months.
Gold prices, seen as a haven in times of market woes, rose sharply on Monday before falling slightly on Tuesday.
On Tuesday, Fed Board Governor Christopher Waller noted that he had not read the Citrini report “in depth” but rejected the broader idea that AI will lead to a rapid rise in unemployment as the technology displaces employees.
“I don’t think that’s going to happen,” Waller said, adding that he is “not a doom and gloom kind of person like the report portrays.”
“AI is a tool,” he said. “It won’t replace us as people.”
