Citigroup Cuts US Equities and Tech to Neutral Citing AI Spending Concerns

Citigroup strategists have downgraded US equities and global technology stocks to neutral from overweight, advising investors to adopt a defensive rotation. The downgrade follows a broad selloff that erased approximately $3 trillion in market value from S&P 500 companies and pushed the Nasdaq's 12-month forward price-to-earnings multiple to levels last seen in March 2020. Strategists warned of vulnerable sentiment, aggressive artificial intelligence spending, and potential regulatory pushback against data center expansions following US midterm election results. Consequently, Citi raised European equities excluding the UK and Global Health Care to overweight.