Morgan Stanley & The AI Apocalypse (Probably)

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The markets experienced a minor gravitational anomaly Monday—or, as the less poetic among us might say, a downturn—with the Dow shedding 1.3%. The proximate cause? A report from a research outfit called Citrini, which, frankly, sounds less like a financial institution and more like a particularly vibrant citrus fruit. Their concern? The potential for artificial intelligence to, shall we say, disrupt things. (Disruption, of course, being the polite euphemism for “potentially rendering vast swathes of the workforce economically redundant.”)

Financial giant Morgan Stanley (MS 4.28%) found itself down 4.3% as of 1:30 p.m. ET, which, in the grand scheme of cosmic events, is hardly noticeable. Though, if you happen to be a shareholder, it may feel disproportionately significant. (It’s all relative, really. Like the size of a planet compared to a dust mite. Or the likelihood of finding a decent cup of tea in outer space.)

How Citrini Research Briefly Alarmed Everyone

If you haven’t encountered Citrini Research before, don’t fret. I hadn’t either, and I spend a considerable amount of time attempting to decipher the economic pronouncements of various entities. (It’s a bit like trying to assemble a jigsaw puzzle where all the pieces are slightly different shades of beige.) Apparently, they specialize in “deep insights into thematic equity investing and global macro trading… for institutional investors.” Which, translated from marketing-speak, means they look at things and then tell other people what they think.

Their current report focuses on the implications of artificial intelligence agents—those digital entities that, according to Google, “use AI to pursue goals and complete tasks on behalf of users.” (Which is a remarkably understated way of describing a technology that could, theoretically, end up managing your entire life, including your choice of socks. A chilling thought.) Currently, 33% of Americans are already employing these agents. Citrini predicts that, over the next few years, they’ll become ubiquitous, automating online shopping, subscription services, and the relentless pursuit of better deals. (The ultimate consumer optimization, or the beginning of a robotic dystopia? The jury is still out.)

Lower prices for consumers, naturally, translate to reduced profits for companies. And reduced profits, as any economist will tell you, often lead to cost-cutting measures. (Including, regrettably, the rather inconvenient practice of laying off employees.) Citrini anticipates that, by 2028, AI agents could contribute to 10% overall unemployment, potentially leaving half of all white-collar workers seeking alternative employment. (Perhaps as professional tea tasters? It’s a niche market, but it exists.) And, according to their projections, the S&P 500 could experience a rather substantial decline—a 38% loss, to be precise. (Which, in the grand scheme of things, is merely a statistical blip. But try explaining that to your portfolio manager.)

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What This Means for Morgan Stanley (and Possibly the Future of Civilization)

So, why is this particularly bad news for Morgan Stanley? Well, consider the following: if a significant portion of the population finds itself unemployed, they may struggle to repay their debts. (A rather obvious point, perhaps, but one worth reiterating.) This, in turn, could lead to loan losses for Morgan Stanley. Moreover, corporate borrowers may also be at risk as their profits erode. (A vicious cycle, really. Like a hamster wheel powered by existential dread.) Yields on corporate debt will likely rise, diminishing the value of the bonds Morgan Stanley already holds. And, inevitably, some borrowers will simply default on their loans. (The economic equivalent of throwing your hands up and declaring, “It’s all pointless!”)

This, as you might imagine, is not ideal for bank stocks. And Morgan Stanley investors are only just beginning to realize this. (It’s a bit like discovering that the Earth is, in fact, shaped like a donut. A startling revelation, to say the least.) The implications, of course, extend far beyond the realm of finance. We are, potentially, on the cusp of a technological revolution that could fundamentally alter the very fabric of society. (Or, more likely, simply result in a slightly more efficient way to order pizza.)

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2026-02-23 21:54