Citi's strategist Scott Chronert has adjusted the bank's tech weighting recommendation from overweight to market weight, indicating a cautious stance on the sector. He noted that while semiconductor earnings momentum is strong, it raises concerns about the sustainability of growth across all AI and tech companies.
This sentiment was reflected in market movements, with tech stocks, especially chip manufacturers like Nvidia and Micron, experiencing declines following news that OpenAI might postpone its IPO. The VanEck Semiconductor ETF also fell by 3%.
Despite this cautious outlook on tech, Chronert remains optimistic about equities overall, maintaining a year-end target of 8,100 for the S&P 500, which aligns with the highest projections in the CNBC Market Strategist Survey.
He anticipates a rotation away from tech stocks, driven by expectations of weaker oil prices leading to reduced inflation concerns in the third quarter, which could encourage broader market positioning