Key Takeaways
Citigroup upgraded its rating on US stocks to “Overweight” on Monday, forecasting the technology sector will drive nearly 50 percent of global earnings growth while valuations have become more attractive.
"A highly concentrated earnings structure is a key reason for our structural preference for US equities," Citigroup strategists said in a note, highlighting the increasing weight of US tech companies in global profits.
The bank raised its rating on US stocks from “Neutral” following a recent market pullback that has brought the S&P 500's valuation premium closer to its historical average. Concurrent with the upgrade, strategists downgraded emerging market stocks to “Neutral,” citing their high sensitivity to energy price shocks and a strengthening US dollar.
The move aligns Citigroup with other major institutions like BlackRock in favoring US equities over global peers, a stance that could direct more capital into large-cap tech stocks and away from emerging markets, which have seen the MSCI EM index fall 2.8% since the Iran conflict began.
The upgrade reinforces a bullish consensus forming around US tech dominance as the primary driver of global returns. Investors will now watch for Q2 earnings reports to confirm if the tech sector's profit momentum can justify the renewed optimism.
This article is for informational purposes only and does not constitute investment advice.
