The "Citrini" essay caused a market sell-off not because it was more technically sound than other AI analyses, but because it framed abstract AI risk in the concrete language of finance (SaaS multiples, credit risk), making it resonate powerfully with a Wall Street audience.

Unlike previous technologies like the internet or smartphones, which enjoyed years of positive perception before scrutiny, the AI industry immediately faced a PR crisis of its own making. Leaders' early and persistent "AI will kill everyone" narratives, often to attract capital, have framed the public conversation around fear from day one.

The Wall Street Journal framed Anthropic's new models as the direct cause of a global stock sell-off in the software sector. While an oversimplification, this narrative serves as "aura farming," building a perception of immense power that far exceeds the company's actual market share.

The rhetoric around AI's existential risks is framed as a competitive tactic. Some labs used these narratives to scare investors, regulators, and potential competitors away, effectively 'pulling up the ladder' to cement their market lead under the guise of safety.

The notable aspect of the Citrini Research piece isn't its dystopian predictions, but its widespread acceptance among investors. Unlike previous 'AI doomer sci-fi,' it's acting as confirmation bias for a market already grappling with AI's disruptive potential. The report's success signals a major shift in 'common knowledge' about AI's socioeconomic risks.

Leopold Aschenbrenner's technical "AI 2027" paper had similar dire conclusions as the Citrini essay but didn't impact markets. Citrini's piece caused a sell-off because it was framed for a financial audience, demonstrating that the packaging and language of an idea are critical for it to influence different domains.

The AI boom can sustain itself as long as its narrative remains compelling, regardless of the underlying reality. The incentive for investors is to commit fully to the story, as the potential upside of being right outweighs the cost of being wrong. Profitability is tied to the narrative's durability.

The recent software stock wipeout wasn't driven by bubble fears, but by a growing conviction that AI can disintermediate traditional SaaS products. A single Anthropic legal plugin triggered a massive sell-off, showing tangible AI applications are now seen as direct threats to established companies, not just hype.

The stock market's high valuation is based on AI generating huge profits, which implies replacing human workers. If AI is overhyped and jobs are safe, the market's core premise collapses, leading to a crash. This creates an economic dilemma where one major indicator must fall.