For months now, global markets have been riding an AI high, a rally powered almost entirely by a handful of tech giants building chips, models and cloud infrastructure. But beneath the euphoria sits a growing unease that investors have quietly started whispering about: the “AI trade scare.” It’s the fear that the world’s biggest stock indices are now so dependent on AI-linked companies that even the slightest wobble in demand or earnings could jolt the entire system.
That anxiety has now spilled into the open. Global markets have come under fresh pressure as a mix of AI-related disruption fears, tariff uncertainty, and questions over the resilience of software and IT-services business models collide.
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Tariff moves created early instability
U.S. markets were already sliding after former President Donald Trump proposed raising tariffs from 10% to 15%, reviving concerns about global trade tensions and supply-chain uncertainty. These tariff announcements reportedly contributed to an 800-point intraday drop in the Dow Jones Industrial Average, creating a fragile backdrop for further volatility.
In the days prior, CNN Business noted that investors were increasingly concerned that rapid AI deployment could “upend” parts of the finance, software and consumer-technology sectors, affecting revenue models and labour demand. The outlet reported that these AI concerns had already made markets more sensitive to negative triggers.
Citrini Research’s scenario amplified existing concerns
The downturn accelerated after a detailed scenario published by Citrini Research, a U.S. research group, circulated widely.
Citrini’s Substack post, labelled “a scenario, not a prediction”, described a 2026–2028 chain of events in which AI agents reduce SaaS revenues, weaken white-collar employment, and trigger strain in private credit and mortgage markets.
While the authors stressed that the document was a hypothetical exercise, the report said the scenario contributed to declines across several companies mentioned in the analysis, including Uber, DoorDash, Mastercard and American Express.
Technology and IT services stocks saw the sharpest reaction
The shift away from tech extended to India, where reports suggested that foreign portfolio investors turned net sellers, pulling out of Indian IT stocks such as TCS, Infosys and Wipro. The outlet linked the selling to global concerns over whether AI could shrink contract revenues and raise automation risk.
Several software sub-industries and cybersecurity firms were under pressure as investors reassessed long-term demand in an AI-altered market environment.
The AI trade scare was not limited to equities. CoinDesk reported that Bitcoin, Ethereum, Solana and XRP all extended losses as traders reduced risk exposure, indicating that AI-related sentiment had spilled into broader asset classes.
Analysts quoted in Reuters and other outlets said the AI trade scare may reflect a shift from earlier optimism about AI boosting growth to a period of reassessment of valuations and risk.
Instead of seeing AI as uniformly positive, investors are weighing potential disruption to existing revenue streams and labour markets, along with macro risks such as tariffs and interest rates. Investments in AI infrastructure and earnings trends are now being judged against data rather than purely forward-looking expectations.
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First Published on March 1, 2026, 10:41:02 IST
