Whispers of fear and paranoia, a single report ignites Wall Street's AI panic, causing the Dow to plummet by 800 points

In the U.S. stock market, where technology stocks have an overweight presence and are highly sensitive to the prospects of artificial intelligence, even the slightest disturbance can trigger intense market volatility.

The Wall Street Journal reported that Citrini, a research firm, released a report titled “The Global AI Crisis of 2028” on February 23, which sparked a new wave of AI-related panic in the market. On Monday, the Dow Jones Industrial Average plunged by 800 points.

The report paints a bleak future: technological revolutions will lead to a “race to the bottom” for white-collar knowledge-based jobs.

Concerns about overinvestment by large-scale cloud service providers are no longer the focus, and worries about disruptive impacts on the software industry seem overly mild. The report predicts an impending “Global AI Crisis.”

“The Global AI Crisis”: A Human Intelligence Replacement Spiral Without Natural Brakes

A broader, sharper new issue emerges: if AI development appears highly beneficial to the economy, could it ultimately turn out to be a negative force?

Citrini is a small firm focused on macro and thematic stock research. Its report projects a scenario for June 2028, stating: “Throughout modern economic history, human intelligence has been a scarce resource. Now, this scarcity premium is gradually diminishing.”

The report describes a cycle: “AI capability improvement → reduced demand for white-collar employment → increased layoffs of white-collar workers → decreased consumer spending among the unemployed → profit pressures force companies to increase AI investments → further enhancement of AI capabilities…”

This is described as a negative feedback loop without natural brakes, called the “Human Intelligence Displacement Spiral.”

The report states that software companies, payment service providers, and others are engaged in a “long chain of bets on white-collar productivity improvements,” which AI will disrupt.

It is projected that the income and consumption capacity of white-collar workers will face structural shocks, prompting underwriters to reassess whether high-quality mortgages still have repayment value.

The report also offers pessimistic forecasts for various intermediary industries. Due to limited time, patience, and scarce professional judgment, many have long been willing to pay high prices to reduce operational complexity. This demand creates enterprise value worth trillions of dollars.

Intelligent agents will eliminate these inconveniences and the associated business opportunities: humans lack the time to compare prices across five platforms for a box of protein bars, but machines can do it.

The simplest travel booking platforms will be the first to be displaced, as intelligent agents can plan complete trips (flights, hotels, ground transportation, memberships, budgets, refunds, etc.) faster and cheaper than any platform.

Insurance businesses relying on customer inertia for renewals will also be restructured, as intelligent agents will annually compare coverage options, undermining the 15%-20% premiums insurers earn from passive renewals.

Financial advisory, tax filing, routine legal services—any service centered on “helping you handle complex, tedious tasks”—will be disrupted.

Industries relying on human relationships are also vulnerable. Due to information asymmetry, real estate buyers have long tolerated 5%-6% commissions, but AI agents equipped with property databases and decades of transaction data can instantly replicate professional expertise.

The programming industry is similarly bleak. The report believes AI will almost write all code, with top-tier intelligent agents far surpassing humans in most fields, while costs continue to decline.

AI has indeed created new jobs: prompt engineers, AI safety researchers, infrastructure technicians. Humans still coordinate and oversee aesthetic judgment at the highest levels, but for every new role created, dozens of jobs are eliminated, and new roles pay far less than old ones.

The report concludes that the inherent premium of human intelligence stems from its scarcity. Now, that premium is eroding. The world is re-pricing itself, but re-pricing does not mean collapse. The economy can find a new equilibrium, and reaching that new balance is one of the few tasks only humans can accomplish—and we must do it correctly.

Dow Falls 800 Points, U.S. Stocks Roughly Align with the Report’s Scenario

The U.S. stock market on the 23rd largely reflected the scenario outlined in the report: rapidly iterating AI tools are driving industries to cut labor costs, leading to widespread white-collar unemployment, which then propagates into financial risks.

DataDog, CrowdStrike, and Zscaler, all software and cybersecurity firms, each plunged over 9%. IBM dropped 13%, marking its worst single-day performance since 2000. Major companies mentioned in the Citrini report, such as American Express, global investment firm KKR, and Blackstone, also declined.

Delivery platform DoorDash’s stock fell 6.6% on the 23rd. Previously, Citrini published an article on Substack claiming that this app exemplifies how AI is disrupting profit models based on interpersonal information asymmetry. The firm projects that AI agents will complete delivery processes at lower costs, helping drivers and customers.

On Monday, DoorDash co-founder Andy Fang responded on social media to Citrini’s report, stating, “The rise of agent-based commerce will require companies to adapt to AI agents and physical merchants.”

He wrote, “The industry landscape is undergoing a major transformation, and the entire sector needs to adapt to this trend.”

Private credit institutions that have recently extended large loans to the tech industry also faced shocks on the 23rd. Blue Owl Capital fell 3.4%, and Apollo Global Management declined 5%. Lenders from major Wall Street banks to regional banks were all sold off.

UBS analysts recently told clients: “From a credit perspective, the core risk is not the disruption itself but the speed at which it occurs. A rapid shock within 12 months could cause contractual protections to fail, but we believe a more likely scenario is a gradual, multi-year adjustment.”

The panic sparked by the report, combined with renewed trade policy uncertainties from the U.S. government, dragged major U.S. indices lower on the 23rd.

The Dow Jones Industrial Average led the decline, dropping 1.7%, the S&P 500 fell 1%, and the Nasdaq Composite declined 1.1%.

Dow Dives 800 Points on the 23rd; Nasdaq and S&P Also Decline

In recent weeks, concerns about disruptive AI impacts have also swept through the software, private credit, insurance, and wealth management sectors.

Earlier this month, a company that once produced karaoke machines announced the launch of AI tools to optimize freight, triggering one of the worst trading days in history for transportation stocks. However, many of these stocks quickly recovered most of their losses afterward.

Jordan Rizzuto, CIO of GammaRoad, said: “The market’s pricing reaction to AI-related shocks is happening earlier than most expected. That’s the essence of accelerated technological iteration.”

U.S. Trade Policy Uncertainty Grows, Funds Flow into Safe-Haven Assets

U.S. trade policy also heightened market uncertainty. On the 21st, after the Supreme Court ruled that tariffs were illegal, President Trump announced plans to raise the “global tariff” from 10% to 15%.

While this move added more uncertainty to trade agreements and negotiations, many analysts believe its actual economic impact will be limited.

Companies waiting for tariff refunds or planning new investments are not immune. Trade-sensitive stocks like American Eagle Outfitters, Ralph Lauren, and Yeti Holdings tumbled on the 23rd. Logistics and transportation firms were also sold off, with the Dow Jones Transportation Average dropping 2.8%.

Benefiting from inflows into safe-haven assets, bond markets strengthened.

The 10-year U.S. Treasury yield closed at 4.026% on Monday, the lowest since late November. Precious metals rebounded: near-month gold futures rose 2.9% to $5,204.70 per ounce, and silver increased 5.2% to $86.52 per ounce.

On February 23rd, investors also shifted funds into energy and consumer staples sectors, though these industries have relatively low weightings in major indices. Many investment firms see this defensive asset preference as a sign of growing caution about the market outlook.