The AI boom that powered stocks to fresh records is facing its first serious investor skepticism. A stark Citrini Research report predicting AI-driven layoffs by 2028 ignited Monday’s sell-off, dragging down legacy tech names like IBM and payment giants Mastercard and Visa. Our analysis reveals how capital expenditure on AI is now under the microscope—will the spending ever translate into sustainable profits?
Stocks surged to records in large part because of hope—and hype—about artificial intelligence.
But in recent months, worries about aggressive spending on AI have rippled through Wall Street as investors question whether that spending will materialize into actual profits. Investors are asking: Is the hype justified? And will the hype sink into actual profits?
A stark Citrini Research substack post published Sunday laid out a bleak vision of a 2028 world reshaped by AI. Citrini’s analysis warned of a stock market crash, a sharp pullback in consumer spending, and widespread white-collar layoffs beginning in 2028. This warning has added fuel to ongoing fears about the technology’s disruptive effects. Monday saw the markets’ reaction: sharp sell-offs cut across a variety of industries, not just tech. Visa, Mastercard and IBM all fell sharply Monday, extending a broader bout of volatility across AI-linked names.
The Sell-Off That Rippled Across Wall Street
Visa, Mastercard and IBM all fell sharply Monday, extending a broader bout of volatility across AI-linked names. Tuesday saw a modest bounce back across markets as some software stocks rebounded, thanks to new AI integrations announced by Anthropic. The benchmark S&P 500 index remains roughly flat for the year.
Payment companies were hit particularly hard Monday after Citrini’s report suggested AI would soon threaten white-collar jobs, reducing consumer spending. Visa and Mastercard tumbled amid new fears of reduced transaction volumes. IBM, another Citrini-mentioned stock, suffered its worst single-day drop in over 25 years after Anthropic announced its new Claude Code tool could be used to update legacy systems—a direct threat to one of IBM’s core consulting businesses.
Anthropic’s Latest Move: Why It Terrified Investors
On Monday, IBM suffered its worst, single-day drop since October 2000 during the dot-com bust. Part of the pressure came after Anthropic’s midday announcement that its Claude Code tool could be used to update a legacy computing language such as COBOL. Investors quickly saw the development as a direct threat to the kind of maintenance and modernization work that underpins IBM’s legacy business. Shares of Accenture and Cognizant Technology fell in tandem.
The intense focus on profit materialization is partly due to the recent surge in AI capabilities. Since November, AI-powered coding systems such as Anthropic’s Claude Code and OpenAI’s Codex have surged in capabilities and popularity among software developers. With these tools, complex software packages and products can now be developed in days, threatening traditional tech consulting workflows.
Beyond Tech: Where Else Is AI Disrupting Markets?
Investors covering industries ranging from trucking and logistics to legal services are waking up to the fact that traditional barriers to entry for competitors might soon be dissolved by AI’s coding power. The Citrini report highlighted logistics automation, legal document review, and even basic customer service roles as imminent job losses. This has already led investors to pull money out of sectors viewed as vulnerable to AI.
Mona Mahajan, head of investment strategy and asset allocation at Edward Jones, said investors have been quickly pulling money out of sectors viewed as vulnerable to AI disruption, including financial services, real estate, transportation and logistics. She noted the underlying businesses themselves haven’t materially changed, underscoring the speculative nature of the reaction.
One of the few beneficiaries so far has been consumer staples—staid giants like Walmart and Coca-Cola saw buying support as investors sought safety in businesses less likely to be disrupted by AI. The S&P 500 itself closed flat for the year, caught between the market leaders such as Nvidia, which continue soaring, and laggards fighting for survival.
Melissa Otto, head of Visible Alpha research at S&P Global, told onlytrustedinfo.com that growing AI-focused capital expenditure and recent advances in the field threatened many existing business models.
“I think it has started to call into question how exactly software companies are really going to compete and provide something superior in this environment,” she added, highlighting companies with complex workflows and troves of unique data stand a better chance of withstanding the coming AI onslaught.
The Other Risks on Investor’s Minds Right Now
AI isn’t Wall Street’s only worry. Besides AI-related uncertainties, investors are contending with geopolitical tensions—the risk of U.S.-Iran war—and legal uncertainty around President Donald Trump’s now-invalidated emergency tariffs. RBC Capital Markets’ Lori Calvasina noted these challenges could distract U.S. markets in the near term from AI-led disruptions.
“Investors have been ruminating on a number of AI concerns in early 2026, with concerns about cash flow, capex levels, and whether a number of different industries will survive the AI era,” Calvasina wrote, cautioning the long-term AI outlook may still be overblown.
Yet, for now, the AI debate dominates conversations across trading floors. Wall Street’s sudden fascination with AI bottom lines is partly a sign of a broader shift: after years of hype, impatient investors are finally demanding AI’s promise be measured in hard earnings power, not wide smiles and sizzling charts.
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