'Global Intelligence Crisis' Takes the Market Down: Here's What's Really Going On
The AI wrecking ball found new targets on Monday and the damage was significant.
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The market suffered significant damage on Monday. The primary reason for the tsunami of selling was a research report from Citrini Research titled "The 2028 Global Intelligence Crisis." The report is written as a hypothetical scenario from the future. The authors clearly stated that the document is not a prediction, but it created fear in an already nervous market that has seen the AI wrecking ball hit a series of business sectors.
The Dow was the biggest loser, losing over 800 points and closing at the day's low. Breadth was brutal, with just 27% of stocks gaining ground. Retailers, pharmaceuticals and Apple (AAPL) were safe havens as they are somewhat insulated from the AI wreckage.
Software, payments, and delivery stocks were hammered. DoorDash (DASH) , American Express (AXP) , KKR (KKR) and Blackstone (BX) all dropped more than 8%. Uber Technologies (UBER) , Mastercard (MA) , Visa (V) , Capital One Financial (COF) and Apollo Global Management (APO) were all down at least 3%. AppLovin (APP) , Asana (ASAN) , DocuSign (DOCU) and Zscaler (ZS) were among the software names hit hardest.
What the Report Actually Says
The Citrini scenario imagines a world two years from now in which AI has caused mass white-collar unemployment, a collapse in consumer spending and a 38% drop in the S&P 500 from its October 2026 highs.
It specifically targets business models built on transaction fees, such as payment companies like Visa (V) and Mastercard (MA) . The thesis is that AI agents will eliminate the friction those companies profit from. It also targets delivery platforms like DoorDash and enterprise software companies whose pricing power erodes as AI replicates their products cheaply and quickly.
Michael Burry amplified the report on X, adding fuel to the fire with his typical ominous doomsday commentary.
The AI Wrecking Ball Gets Concrete
While the Citrini report is speculation, the AI disruption story got very concrete support on Monday.
Anthropic announced that its Claude Code tool can automate the exploration and analysis phases of COBOL modernization, potentially cutting what used to take years down to quarters. That sent IBM (IBM) down nearly 12%, the Dow's biggest loser on Monday. This matters because COBOL maintenance is a $30 billion annual market and represents some of the highest margin business at both IBM and Accenture (ACN) . Legacy complexity is literally the moat that keeps clients locked in. If AI eliminates that complexity, it doesn't just compress margins, it eliminates the reason clients can't leave. That is the AI wrecking ball in real time, not a hypothetical scenario from 2028.
My Take
The market sold off hard on a work of speculative fiction. The market has shown incredible resilience in the face of actual bad news, yet a hypothetical scenario sent it into a tailspin.
That shows the market is extremely fragile right now. Sentiment is poor, conviction is low, and investors are looking for any reason to sell. The Citrini report was the spark but the kindling has been building for weeks.
It is deeply ironic that AI is now creating destruction of this magnitude. In 2000, investors extrapolated endless profits from internet technology and bid stocks to insane valuations. Although the internet caused major changes to business and the economy, I don't recall traditional businesses being destroyed at this speed or scale.
Investors are now extrapolating endless destruction from AI technology and selling real businesses with real earnings into the ground which may eventually produce great values. This is the same mistake as 25 years ago but in the opposite direction. It was irrational exuberance in 2000, but is irrational panic now.
Is the underlying concern legitimate? Yes, to a degree. The AI wrecking ball is real and it is disrupting business models across the economy. The IBM example proves that. But selling Visa and Mastercard into the ground because of a hypothetical scenario set two years in the future is not investing. That is panic.
Risk Off Everywhere
The selling isn't limited to stocks. Bitcoin has fallen below $64,000 as leveraged liquidations accelerate. When crypto gets hit alongside software and payments, you know this is broad based risk-off, not just sector rotation.
This is top-down selling and that means that indices and ETFs are sold as is every stock that is in those vehicles. That eventually creates mis-pricing and opportunity, but it takes time.
My Game Plan
Days like Monday are good illustrations of why position sizing and patience matter so much. If you were sized correctly, you can watch this volatility without being forced into bad decisions. If you were overextended, this kind of day is genuinely painful.
I'm not chasing anything down here. The market needs to find support and stabilize before I get aggressive. Right now the sellers are in control and fighting that is a losing battle. Stay patient, protect your capital, and let this play out. The opportunities will come but today is not the day to be a hero.
Have a good evening. I'll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
