Yardeni Pushes Back On Citrini's AI Apocalypse, Keeps S&P 500 10,000 Target In Play

Veteran Wall Street strategist Ed Yardeni is pushing back against the market panic sparked by a viral research note warning that artificial intelligence could trigger a self-reinforcing economic collapse.

On Monday, Citrini Research published a provocative thought experiment titled "The 2028 Global Intelligence Crisis."

The piece — written as a fictional macro memo from the future — outlined a scenario where AI-driven productivity turns from market tailwind into economic wrecking ball.

The market listened.

On Monday, software stocks – tracked by the iShares Tech-Expanded Software Sector ETF (NYSE:IGV) – plummeted nearly 5%.

Shares in private-equity giants – seen as the collateral damage of the software destruction – including Ares Management Corp. (NYSE:ARES), Blackstone Inc. (NYSE:BX) and KKR Inc. (NYSE:KKR) sunk between 6% and 9%.

What Citrini Research Said About AI

Citrini's core thesis is deceptively simple: what if AI bullishness keeps being right… and that's exactly the problem?

In its hypothetical scenario, AI agents rapidly replace white-collar workers.

Companies cut payroll, funnel savings into more AI compute, improve margins, and then cut more workers.

The result is what the firm calls a "negative feedback loop with no natural brake."

Productivity surges. Corporate profits initially expand. Equity markets rally.

But household income — especially among high-earning professionals who drive discretionary spending — weakens.

Consumer demand softens. Software companies face pricing pressure as AI lowers barriers to building in-house tools. Private credit starts to wobble as growth assumptions tied to recurring SaaS revenues deteriorate.

Eventually, the hypothetical 2028 memo shows unemployment rising above 10% and the S&P 500 down nearly 40% from prior highs.

“The unemployment rate printed 10.2% this morning, a 0.3% upside surprise. The market sold off 2% on the number, bringing the cumulative drawdown in the S&P to 38% from its October 2026 highs,” Citrini Research wrote.

According to Citrini Research, AI disruption could shift from something "contained" and "sector-specific" to broad-based economic distress in less than two years.

Yardeni's Rebuttal: AI Augments, It Doesn't Extinguish

Yardeni isn't buying the doomsday narrative.

In a note published Tuesday, he suggested the market has recently been flirting with the idea that AI could morph into a "Frankenstein monster." But he flatly rejected the extinction storyline.

"We continue to believe that AI is augmenting workers' productivity rather than making them extinct," Yardeni wrote.

He also emphasized that AI remains "artificial but not intelligent" in the human sense — its outputs may sound sophisticated, but the models don't truly understand meaning. That distinction, in his view, is critical — and a key reason he resists the idea that AI will rapidly replace the bulk of white-collar work.

"The good news is that bullish sentiment must be dropping rapidly, as the AI story has morphed from a Roaring 2020s productivity booster to an existential threat to our way of life," he added, implying that excessive pessimism could itself become a contrarian signal.

Importantly, Yardeni hasn't walked back his long-term equity outlook. He continues to project that the S&P 500 could reach 10,000 by the end of the decade.

In his framework, AI lowers costs, boosts output and unlocks entirely new business models — much like prior technological revolutions did.

Certain roles may shrink, he acknowledges. But history suggests innovation tends to reallocate labor rather than eliminate it outright.

Where Citrini Could Be Right — And Where It May Be Going Too Far

Citrini Research raised real concerns about the disruptive effects of AI on the economy.

SaaS companies could lose pricing power if clients believe AI lets them build tools in-house. Businesses that rely on fees, renewals or consumer inertia may see margins shrink as AI reduces friction. And if high-income workers are hit hardest, consumer spending could slow more than headline job numbers suggest.

Markets often react to expectations before the damage fully shows up in the data.

But the worst-case scenario assumes a lot: that companies replace workers almost overnight, that displaced employees can't adapt, that spending collapses instead of shifting, and that policymakers sit still.

History shows technology usually hurts some sectors while creating new ones.

If AI lowers costs across industries, it could also boost productivity, lower prices and spark new demand — not just destroy income.

That's why this debate matters.

If Citrini Research is right, white-collar-heavy sectors face lasting pressure. If Yardeni is right, AI fuels a new earnings cycle and supports higher stock prices.

The real question isn't whether AI changes the economy — it's whether it ultimately makes it smaller or stronger.

That distinction could decide whether the next decade looks like a productivity boom… Or the stress test Citrini just wrote from the future.

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