Citi Shifts Ratings From US Stocks to Europe as AI Sentiment Weakens

Citi tactically downgraded U.S. equities, global technology and European technology to Neutral from Overweight, while upgrading European stocks excluding the U.K. to Overweight. Led by Beata Manthey, the strategists said AI sentiment has weakened and investor positioning could deteriorate further; they want sentiment and earnings revisions to stabilize before restoring their more bullish ratings. The shift followed broad market volatility and concerns about tighter AI oversight, with Citi citing Europe’s lower exposure to technology and potential benefit from falling oil prices as reasons for its relative appeal. Citi remains constructive on AI over the medium term and said risks appear balanced, rather than strongly tilted to the downside.