The viral blog post that captivated Wall Street and rattled investors on Monday comes from Substack's most-popular finance blog.
James van Geelen's Citrini Research has gained a cult following since it began publishing macro and thematic stock research in 2023, thanks in part to an early focus on AI and weight-loss drugs.
Sunday's post, structured as a fictional macro research memo from the future (June 2028), posits "a scenario that's been relatively underexplored," the authors wrote. It isn't a prediction, they cautioned. That didn't stop worries from hitting real-world companies, with shares of DoorDash, Visa, Mastercard, ServiceNow and Blackstone, all mentioned by name in the post, falling sharply on Monday.
Here are come key highlights:
AI coders create software price wars
Recent advancements in AI's ability to write code have impressed engineers. Citrini imagines a world where nearly every line of code is written by AI, and products or features that once took thousands of engineers months to build can now be spun up in hours.
In this future, software companies that renewed and increased large corporate contracts with ease would face new competition and price pressures. Clients could threaten to make their own tools with AI and seek concessions. Or competing software companies that already have brand recognition could easily launch cloned products, all but erasing the ability of firms to differentiate their products from their rivals'.
A sharp decline in software-company earnings would likely reverberate through the private markets. Private-equity firms frequently targeted the industry for leveraged buyouts, betting the steady revenue those companies have produced would continue to grow. But some major private software companies would begin to default on loans by 2027, Citrini writes.
Payment companies and other intermediaries get hit
AI agents that can operate computers, log in to accounts, and act autonomously on behalf of a company or individual could cause a huge shake-up in various industries, Citrini writes.
All sorts of businesses built upon charging fees to perform complex services could suddenly be at risk.
Payment processing companies like Visa and Mastercard are called out as one example. Their business of connecting merchant and consumer banks to facilitate transactions in exchange for a fee could be at risk if AI agents can suddenly perform a similar service on the cheap.
Agents drive down prices everywhere
Meanwhile, AI agents trained to shop for humans have the potential to transform consumer spending, and apply pressure on merchants to slash their prices.
"Humans don't really have the time to price-match across five competing platforms before buying a box of protein bars," the Citrini authors wrote. "Machines do."
The report also noted it will get much easier to find the best price on anything, hurting merchants that relied on brand recognition and customers' previous shopping habits.
A doom cycle in white-collar labor
While new jobs related to AI industries begin popping up, they won't come close to replacing all the jobs being cut and outsourced to AI, according to the Citrini report.
Companies feeling price pressure cut staff to keep margins high, investing in their AI capabilities instead. This leads to better AI capabilities -- and the need for even fewer workers -- in a self-perpetuating cycle.
Mass layoffs concentrated in traditionally high-paying fields begin to ripple through the economy. And while the blue collar and gig economy labor markets are less affected, white collar workers who can't find work begin to flood in, increasing labor supply. Wages plunge, putting a chilling effect on America's consumer dependent economy.
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