Citrini Research's recently released "2028 AI Doom Prophecy" presents a comprehensive vision of a dystopian future shaped by artificial intelligence. The report predicts that by 2028, despite an unexpected surge in global AI productivity, a "global economic plague" will occur due to the complete disruption of white-collar employment. This has triggered panic across global financial markets. Multiple market sectors, from software and wealth management to logistics, have experienced panic selling following the report's release. Investors are growing increasingly fearful about the potential impact on earnings prospects from agentic AI tools like Claude Cowork and OpenClaw (formerly Clawdbot, Moltbot), adopting a "shoot first, ask questions later" selling approach.
Simultaneously, this "memo on AI prosperity crisis from the future" from Citrini Research is strengthening a specific bet: because Asia possesses core chip manufacturers like Taiwan Semiconductor Manufacturing and numerous AI compute infrastructure companies such as Hon Hai, SK Hynix, and Samsung, the Asian AI compute infrastructure supply chain is positioned to be the biggest winner in the "AI disrupts everything" trend. This stands in stark contrast to the US technology sector, which has high exposure to software and light-asset business models and is experiencing significant turbulence. The high concentration of the world's most advanced chip manufacturers, high-performance AI server contract manufacturers, and assemblers of core AI data center hardware like power equipment and liquid cooling systems, combined with recently listed Hong Kong stocks like Zhipu and MiniMax that are closely tied to large AI models, is increasingly attracting global investors to Asian tech stocks.
Alap Shah, co-author of the dystopian report and Chief Investment Officer at Lotus Technology Management, stated that the key beneficiaries of the "global AI investment theme" will be core players in semiconductors, large AI data centers, and foundational model labs. Shah suggested governments should consider taxing incremental or windfall profits from AI to help mitigate unemployment impacts, as the report highlights potential technological disruption. He noted the market reaction to their report was "certainly much larger than we initially expected." Shah's firm typically shorts companies they believe will be severely disrupted by AI, while holding significant positions in semiconductor stocks expected to benefit. He anticipates further short-term market volatility, especially for software companies, as traders assess AI's long-term potential effects.
The report's impact stems not from presenting new facts, but from offering a structured, tradable left-tail scenario. It posits a counterintuitive question: if the AI bull narrative continues to prove correct, could it ultimately be negative for the economy and markets? Citrini's proposed mechanism involves AI agents replacing white-collar jobs, leading to falling wages and consumption, and ultimately creating "Ghost GDP"—strong productivity without monetary circulation. In this dystopian scenario, consumer-driven economies are eroded, causing a negative feedback loop for risk assets like stocks at high valuations, potentially leading to double-digit unemployment and a major global equity market pullback.
The report effectively splits the simple "AI equals higher productivity/margins" story into a conflict between "market prosperity" and "real economic weakness." Its real-world impact is explained by its focus on currently crowded, highly-valued sectors vulnerable to AI narrative backlash—software/SaaS and business models reliant on "human friction." A persuasive pessimistic narrative framing concerns about AI agents eroding seat-based subscription and intermediary revenue can quickly trigger active fund selling, quantitative model de-risking, and rising cross-sector correlations. The market reaction reflects a realization that high-multiple software stocks have little buffer against AI machines repricing growth visibility.
Business Insider commentary confirms the report acted as a catalyst for renewed software stock volatility and broader market declines. However, while Citrini's concerns target the vulnerability of software business models (seat-based, subscription, process intermediation)—concentrated in US giants—upstream sectors like semiconductors, memory, server/chip manufacturing, advanced packaging, and AI data center infrastructure are seen as more certain AI cash flow channels. As long as the core logic of "AI capex → hardware supply → compute scarcity pricing" remains valid, Asian tech stocks are likely to generate structural alpha. Alpha refers to returns significantly exceeding benchmark index returns (Beta).
The strongest theme in AI investing is the manufacturing/contracting of AI compute infrastructure, characterized by supply constraints and high technical barriers. This shifts AI unit economics from "software seats" to "compute and energy per token," and these segments are predominantly concentrated in Asia.
The "AI scare trade" erupted in US software stocks, driving capital toward Asian chip stocks and the AI data center chain. The MSCI Asia Pacific Information Technology Index, which includes key players like Taiwan Semiconductor Manufacturing and Hon Hai, rose over 1.5% on Tuesday, hitting new record highs. In contrast, US and global software stocks fell sharply following the report. This shift is fueling a historic strong start for the MSCI Asia Pacific Index relative to the S&P 500.
Shah explicitly stated, "Semiconductors are huge winners. Everything upstream, meaning everything needed to build large AI data centers, are huge AI winners." He expects AI profits to concentrate in the "AI complex"—stocks related to AI manufacturing materials, chips, AI compute infrastructure makers, foundational model labs, and some large tech stocks.
Taiwan Semiconductor Manufacturing, alongside major memory chip makers Samsung and SK Hynix, provides the world's primary chip investment targets. Chinese firms MiniMax and Zhipu AI have seen their stocks double this month, offering rare pure-play AI lab exposure, unlike the private OpenAI and Anthropic. Japan's market also benefits from AI, with companies like Lasertec playing a critical role in the EUV lithography supply chain essential for advanced AI chips.
The dominance of chip stocks in Asian indices amplifies this US-Asia divergence. Taiwan Semiconductor Manufacturing holds a 45% weight in the Taiwan Weighted Index, triple its weight a decade ago. Samsung and SK Hynix together comprise about 40% of South Korea's KOSPI, this year's top-performing major benchmark. Driven by these giants, BlackRock's iShares MSCI Emerging Markets ETF (EEM) achieved a rare ten-session winning streak, hitting record highs and significantly outperforming US benchmarks year-to-date.
Analysts note that Asian tech leaders are direct beneficiaries of soaring AI spending by global tech giants. The weekly correlation between the MSCI Asia Pacific IT Index and the Nasdaq 100 has plummeted to 0.45, the lowest since October 2017, indicating significant decoupling.
Concerns around software stocks stem from rapid advances in AI agent tools, fueling debates about the erosion of traditional SaaS business models. Author Nassim Taleb has warned some software segments could face severe pressure, including potential bankruptcies. The "AI disrupts everything" narrative gained traction in mid-February, particularly after Anthropic's new AI agent tools sparked a broad sell-off in SaaS and software sectors. The S&P 500 Software & Services Index has fallen approximately 15% since late January, erasing nearly $1 trillion in market value in a week. The sell-off spread to insurance, real estate, trucking, and other labor-intensive industries perceived as vulnerable to AI disruption.
This shift highlights investors moving capital away from North American SaaS stocks and high-spending AI pioneers like Microsoft and Amazon, toward AI compute infrastructure producers with stronger pricing power—nearly all of which are based in Asia.
Soaring memory chip prices and demand boost the bullish trajectory for chipmakers like Samsung, while Taiwan Semiconductor Manufacturing's central role in manufacturing AI chips for Nvidia, AMD, and Google underpins the entire Asian market.
However, some traditional tech companies are on the losing side. An index of Indian IT giants Tata Consultancy Services and Infosys has fallen over 20% since the Anthropic announcements, with further declines after the Citrini report. Citrini's research indicates the core advantage of Indian IT—lower developer costs—is being eroded by AI coding assistants whose marginal cost is now essentially just the electricity required.
Despite this, investors argue Asian equities overall have strong reasons to continue outperforming US markets, supported by their unique "indispensable" position in the AI compute ecosystem, cheaper valuations, and stronger earnings growth. South Korea reported a 134% year-on-year surge in semiconductor exports for February, prompting its central bank to predict "significantly higher" economic growth this year, driven by robust global memory chip demand.
As long as the massive AI capital expenditure theme persists, Asian tech stocks are likely to remain more resilient. Asia is the manufacturing hub for the critical hardware infrastructure required for immense AI data center investments, and Asian stock markets—especially South Korea and Taiwan—have index weights heavily skewed toward hardware companies poised to benefit substantially from these growth trends.