Citi Downgrades US and Technology Stocks to Neutral, Upgrades European Equities Amid AI Concerns

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Citi has reduced its tactical investment recommendations for US equities and technology stocks, citing concerns about investor positioning and weakening sentiment towards…

Citi has reduced its tactical investment recommendations for US equities and technology stocks, citing concerns about investor positioning and weakening sentiment towards artificial intelligence, while upgrading its outlook for European shares outside the United Kingdom.

The bank downgraded US equities, global technology stocks and European technology stocks from Overweight to Neutral. At the same time, it raised its recommendation for European equities excluding the UK to Overweight.

The changes follow recent declines in global equity markets, with technology shares experiencing particularly pronounced selling pressure as investors reassess expectations for AI-related investment.

Citi said global equity markets have declined following an unusual period in which major indexes remained relatively stable despite substantial shifts in investment between sectors.

Although technology stocks have experienced the largest losses, volatility has subsequently spread across other parts of the market.

The bank identified the possibility of further reductions in investor exposure as a principal reason for lowering its recommendations.

Citi warned that positioning in the Nasdaq could move from approximately neutral to net short, indicating that bearish positions would exceed bullish exposure.

According to its estimates, a further market decline of around 5% would be required for positioning to become decisively negative.

The bank suggested that uncertainty surrounding artificial intelligence investment could continue influencing market sentiment in the near term.

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