Skittish investors spooked as dystopian AI outlook goes viral

An imagined dystopia of mass unemployment fuelled by artificial intelligence, highlighted in Citrini Research's now viral report, has unsettled global markets, where a recent huge bet on the technology is starting to show cracks.

- TOM WESTBROOK

The report, the latest in a series of gloomy “think pieces” on the disruptive potential of AI, envisions a 2028 scenario where unemployment rises to 10.2 per cent, triggered by layoffs as Al rapidly turfs out software and delivery applications.

This hypothetical downturn, compounded by mortgage and private-equity loan defaults, could send shockwaves through financial systems, sending US stocks tanking, stalling credit markets and the broader economy. The Citrini report has struck a chord with markets unnerved by AI’s potential negative impact.

Investors have dumped the shares of software companies and those in sectors vulnerable to automation. The US software shares index is down 24% so far this year. “AI capabilities improved, companies needed fewer workers, white collar layoffs increased ...it was a negative feedback loop with no natural brake,” Citrini report author Alap Shah wrote. Similar big-picture concerns ran through blogs have circulated among investors this month - one by Matt Shumer, the CEO and co-founder of Al firm Otherside AI - about the scale of Al's disruptive power. Shumer says the impact of Al could be “much bigger” than the 2020 COVID crisis that upended everything from global supply chains to the labour force and education.