Artificial intelligence (AI) may significantly displace workers and disrupt consumption-driven economies like the US in the near future, according to Alap Shah, co-author of a Citrini Research report that fueled a scare-trade selloff, and who is now calling for an AI tax to cushion job losses.
Governments should consider taxing incremental or windfall gains from AI, Shah, chief investment officer at Lotus Technology Management, said in a Bloomberg TV interview. Without it, rising unemployment will hit consumption, with the US likely among the most affected. Shah sketched out a scenario where 5 percent of white-collar workers could be cut within 18 months.
“We generally have a set of shorts out against businesses that we think are going to be disrupted by AI,” he said yesterday in Asia. “On the other side of that, we own a lot of semiconductors that we think are going to benefit.”
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Technology shares have slid in recent weeks on fears AI could upend business models, with the weekend report from Citrini Research adding to concerns about widespread disruption and job losses. The paper imagines a 2028 world in which rapid advances in machine intelligence turbocharge productivity but render large swaths of human labor obsolete, sparking job losses, collapsing consumer spending and dragging down stock indexes like the S&P 500.
Among the outcomes discussed, the displacement of white-collar workers creates a negative feedback loop where firms cut jobs to bolster margins, reinvest savings in AI, which enables further cuts. This weakens demand in sectors built on intermediation such as finance, insurance and software. Consumer-facing platforms that rely on discretionary spending — including food delivery services such as DoorDash and Uber Eats — are seen most at risk.
The report contributed to a global selloff in software stocks, with a related exchange-traded fund tumbling 4.8 percent and extending its decline from a peak in September last year to around 35 percent on concerns AI could cannibalize earnings.
In contrast, Asia’s bellwether chipmakers rallied to record highs yesterday. Taiwan Semiconductor Manufacturing Co (台積電), Samsung Electronics Co and SK Hynix Inc each gained more than 2.5 percent.
Shah said he’s surprised by the market reaction. “I thought there was going to be a small reaction — it was definitely larger than we expected,” he said.
Over the next five years, he said white-collar jobs in the US will be a key gauge of AI’s effects, with the impact likely to show up fastest there given its dynamic labor market. White-collar workers account for 50 percent of employment and drive roughly 75 percent of discretionary consumer spending, according to the Citrini paper.
“It’s much easier to fire folks than it is in other parts of the world,” he added.
Drawing a lesson from China, Shah said automation there has “rolled through the economy in a big way.” Companies aren’t creating jobs at the pace needed as the average firm can do far more with fewer workers — and increasingly choose not to hire. That weakens consumer demand and weighs on the economy, a scenario he sees as possible for the US over the next two years.
In the near term, Shah expects further market swings, including in software companies, as traders assess the long-term impact from AI. “We are entering a really highly volatile time in the markets,” he said.
Citrini has been publishing macro and thematic stock research since 2023. The platform has built a devoted following, with more than 119,000 subscribers. Its research spans topics from modern warfare and humanoid robots to GLP-1 drugs and broader macro trends.
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