Wall Street is suffering from AI psychosis

Before last week The name Alap Shah did not ring a bell for many people. The 45-year-old financial analyst and technology entrepreneur has spent the past two decades working in relative obscurity. Then last weekend he co-authored a blog with research firm Strini titled “The Global Intelligence Crisis of 2028.” It was a “thought exercise” on the effects of AI, predicting that in June of that year, AI would push the unemployment rate above 10% and force the Dow Jones Index to fall, down, down. Writing in a confident Nostradamian tone—as if they were auditioning for the starring roles in Michael Lewis’s next book—the authors paint a picture of a flywheel in reverse: AI agents are taking jobs from workers, people are spending less, and struggling companies are laying off workers on top of layoffs.

There wasn’t much that wasn’t heard or speculated about before. Technology leaders like Anthropic CEO Dario Amodei have already appreciated this Half of all entry-level white collar jobs will soon disappearand earlier this year, spurred Anthropic’s launch of new proxy tools Wall Street sell-off. However, the report came with the force of a snowstorm that hit lower Manhattan. When the closing chimes sounded on the New York Stock Exchange, the Dow Jones fell 800 points. Alab Shah’s name now rings bells.

The achievement is less impressive than it sounds. Wall Street, like the rest of us, lives in a state of constant anxiety about artificial intelligence, and it doesn’t take much to trigger a mild panic. Financial markets do not necessarily match reality, but the tensions reflect broader anxiety. The future of AI is in William Gibson territory — it’s here, but unevenly distributed — and the news from those already living in the agent-filled world of writing AI code is both exciting and troubling. Focus on the unsettling.

Nobody – nobody! – He knows exactly how artificial intelligence will impact the economy, but it is clear that it will be of great importance. Right now, stocks are rising, so it seems logical to keep the party going. But then comes the latest doomsday statement, or a paper suggesting that traditional business may be threatened by AI, and suddenly money managers are reminded that the biggest issue of our time has never been solved. Case in point: Earlier this month, a small company (valued at less than $6 million) that had previously sold karaoke machines pivoted to AI-powered shipping logistics and released a report saying it had discovered some efficiencies in loading semi trucks. That was enough for Wiping out billions of dollars From the stock prices of several major logistics companies, none of which had karaoke experience.

After doing his homework on Wall Street, Citrini’s report was widely criticized. Critics climbed over each other to declare his weakness. They point out that AI has had very little impact on the economy so far. Others pointed to the long history of resilience after technological disruption. A Sarcastic response As respected trading firm Citadel Securities reports: “For AI to produce a sustained negative demand shock, the economy must see a significant acceleration in adoption, near complete labor displacement, no fiscal response, negligible investment uptake, and unrestrained expansion of computing.”

The harshest criticism has questioned the report’s claim that much of the economy involves unproductive “rent seeking” by middlemen and market makers, exploiting the laziness of the general population. When everyone has a few dozen AI agents working on their behalf, Shah writes, consumers will be able to easily find the best goods at the best prices. Applications will become unnecessary — just type what you want into LLM and an army of agents will do everything for you. The “poster child” of this phenomenon is DoorDash, says Shah. Instead of being limited to in-app restaurants, consumers will send AI agents to find their perfect meal options, contracting directly with restaurants and delivery staff — no apps needed. Zero friction! The DoorDashes of the world are avocado toast!