© Reuters. The ‘p-AI-n trade’: Citi ‘fundamentally confident’ in its year-end S&P 500 target of 4000
Citi strategists reiterated their 4,000 year-end target on the despite the AI-fueled rally in recent weeks that has seen the index approach 4,300 for the first in 14 months.
They say that investors are buying Growth stocks to increase exposure to artificial intelligence (AI) while at the same time “expressing recession concern via lackluster Cyclical performance.”
The strategists also expect the investor focus on the AI trade to fade “over time as it becomes engrained in corporate business models.”
Citi has a 4,000 year-end target on the S&P 500 and expected the index to mostly trade in the 3,800-4,200 trading range. However, the market is now testing this projection given the AI frenzy and the belief that the Fed is close enough to peak hawkishness.
”We remain fundamentally confident in our year-end S&P 500 index target of 4000 and ongoing 3800-4200 trading range angle. However, a combination of artificial intelligence expectations and eventual end to Fed rate hikes have us looking over our shoulder for upside risk related to a flow shift and sentiment change in favor of equities,” strategists said in a client note.
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