Catenaa, Monday, November 09, 2026- Citi Bank downgraded US stocks and the global tech sector, citing exposure to AI turbulence.
Citigroup’s decision follows a sharp correction in technology shares after the US midterm elections raised concerns about potential restrictions on AI infrastructure development.
US equities suffered significant losses last week as the S&P 500 saw its biggest weekly loss since April 2025, while $2.3 trillion was wiped off the Nasdaq 100 last Thursday alone, according to Bloomberg News.
According to Bloomberg News, Citi strategists led by Beata Manthey downgraded US and global tech stocks to neutral and raised Europe to overweight, citing the region’s greater benefit from falling oil prices.
According to Bloomberg News, Citi strategists are optimistic on the AI outlook but see reasons for a further dip in the market before conditions stabilize, with earnings showing how returns are created by the massive capital spending.
“We worry that positioning on key indices, such as the Nasdaq, could reset lower into net-short territory. While the selloff has been most aggressive in Tech, volatility has been broad-based.” Manthey wrote.
Bloomberg News also reported that Goldman Sachs strategists said Europe captured less of the AI upside, which is now an advantage.
AI infrastructure represents about 15% of the Stoxx 600 and less than a quarter of the benchmark’s 9% earnings growth expected for 2027, the Goldman team, including Guillaume Jaisson, said according to Bloomberg News.
By contrast, those stocks make up about 40% of the S&P 500 and more than two-thirds of next year’s projected earnings growth.
“This lower concentration provides diversification when the AI trade reverses: across the eight largest AI-led selloffs since 2023, Europe outperformed the US every time,” the Goldman team said.
Citi has adjusted its sector allocations to balance exposure to economically sensitive companies with investments in businesses considered more resilient during market downturns. The bank raised healthcare to overweight, alongside its existing preference for materials.
According to Bloomberg News, Citi Strategist maintains a positive outlook for 2027 despite the downgrade, expecting lower interest rates, economic growth and easing tensions in the Middle East.
