Wall Street Has AI Psychosis | WIRED

Overview

Before last week the name Alap Shah didn’t ring a bell for many people. The 45-year-old financial analyst and tech entrepreneur had spent the past two decades working in relative obscurity. Then last weekend he coauthored a blog with the research firm Citrini titled “The 2028 Global Intelligence Crisis.” It was a “thought exercise” about the impacts of artificial intelligence, and it predicted that in June of that year, AI would jack up unemployment past 10 percent and force the Dow down, down, down. Writing in a confident, Nostradamic tone—as if auditioning for starring roles in the next Michael Lewis book—the authors painted a picture of a flywheel in reverse: AI agents take jobs from workers, people spend less, and struggling corporations conduct layoffs on top of layoffs.

There wasn’t much in it that hadn’t been previously heard, or speculated about. Tech leaders like Anthropic CEO Dario Amodei have already estimated that half the entry level white collar jobs will soon be gone, and earlier this year, Anthropic’s release of new agentic tools spurred a Wall Street selloff. Nonetheless the report hit with the force of the blizzard blowing through lower Manhattan. When the closing chimes sounded on the New York Stock Exchange, the Dow was down 800 points. The name Alap Shah was now ringing bells.

Details

The achievement is less impressive than it seems. Wall Street, like the rest of us, is in a persistent state of anxiety about AI, and it doesn’t take much to trigger a mini-panic. Financial markets don’t necessarily map to reality, but the jitters reflect a wider disquiet. The AI future is in a William Gibson zone—it’s here, but unevenly distributed—and the news from those already living in the agent-packed, AI code-writing universe is both exciting and unsettling. Emphasis on unsettling.

No one—no one!—knows exactly how AI will impact the economy, but clearly it will be significant. Right now stocks are soaring, so it seems to make sense to keep the party going. But then along comes the latest doom manifesto, or a paper indicating that a traditional business sector might be threatened by AI, and suddenly money managers are reminded that the biggest issue of our time is totally unresolved. Case in point: earlier this month, a tiny company (valuation under $6 million) that had previously sold karaoke machines pivoted to AI-powered shipping logistics and put out a report saying that it had discovered some efficiencies in loading semi-trucks. That was enough to erase billions of dollars from the share prices of several major logistics companies, none of which had karaoke experience.

After it did its job on Wall Street, the Citrini report came under considerable fire. Critics climbed over each other to proclaim its flimsiness. For one thing, they pointed out, AI has had very little discernable impact on the economy so far. Others cited the long history of resilience after technological upheavals. A mocking response by the respected trading firm Citadel Securities read, “For AI to produce a sustained negative demand shock, the economy must see a material acceleration in adoption, experience near-total labor substitution, no fiscal response, negligible investment absorption, and unconstrained scaling of compute.”

The most withering critiques disputed the report’s contention that much of the economy involves non-productive “rent-seeking” by middlemen and market makers, taking advantage of the laziness of the general population. When everyone has a few dozen AI agents working on their behalf, writes Shah, consumers will be able to effortlessly find the best goods for the best prices. Apps will be rendered unnecessary—just type what you want into the LLM and an army of agents will do everything for you. The “poster child” for this phenomenon, Shah says, is Door Dash. Instead of being limited to the restaurants on the app, consumers will send out AI agents to find their ideal meal options, contracting directly with restaurants and delivery people—no apps needed. Zero friction! The Door Dashes of the world are avocado toast!

Not surprisingly, people at Door Dash did not appreciate this. “We were trying to rationalize—why? Why did they call us out more than anyone else?” says spokesperson Ali Musa. Door Dash, he says, is already navigating the world of AI with some success. “We’ve been doing these partnerships with the LLMs and other [AI] services for several quarters now, and the business continues to grow.”

We’ll have to wait until 2028 to see who’s right about AI and the economy. Maybe, as Shah suggests, society can take action to forestall the crisis. Shah tells me he’s planning to drop a sequel in the next few days with suggestions that could help the apocalypse land softly. “We clearly need some very reasonable policy prescriptions so that the jobs go away very slowly,” he says. Does he expect the market to react to this more upbeat take with an uptick in prices? “I don’t think so,” he says. The market responds, he laments, “Only to the bad stuff.”

It didn’t take long for Wall Street to prove Shah right. A few hours after our conversation, Nvidia announced spectacular earnings—good news for Shah, whose own portfolio is hedged against the apocalypse with major holdings in the chipmakers and, apparently, short positions on companies he sees as disruptees. But while CEO Jensen Huang crowed of a 73 percent leap in revenues, extending a string of fantastic quarters, investors sought reasons to extend their persistent qualms about AI. At the next day’s open, Nvidia stock was down 5 percent.

In your inbox: Upgrade your life with WIRED-tested gear

A wave of unexplained bot traffic is sweeping the web

Big Story: The women training for pregnancy like it’s a marathon

Iran’s digital surveillance machine is almost complete

Listen: Silicon Valley tech workers are trying to stop ICE

Key Takeaways

Before last week the name Alap Shah didn’t ring a bell for many people
There wasn’t much in it that hadn’t been previously heard, or speculated about
The achievement is less impressive than it seems
After it did its job on Wall Street, the Citrini report came under considerable fire