AI stocks surge prompts profit-taking advice
The Citi team, led by Drew Pettit, notes that such strong readings historically indicate impending volatility, though they do not foresee an overall price bubble.
According to strategists at Citigroup Inc., investors are being advised to consider cashing in on the recent surge in AI stocks. The analysis highlights strong investor sentiment towards AI-exposed equities, reminiscent of levels seen in 2019. Drew Pettit’s team at Citi notes that while there’s no clear bubble in AI stocks overall, the rapid rise in specific names raises concerns about increased volatility ahead.
This year, the AI frenzy has driven Nvidia Corp. to briefly claim the title of the world’s most valuable company, while Taiwan Semiconductor Manufacturing Co. surpassed $1 trillion in market value. Citi suggests focusing on profit-taking, particularly among chip-makers, and diversifying investments across the broader AI sector.
Despite cautious signals from Citi, many market observers believe the AI momentum will persist through the year’s second half. Bloomberg News reports a split among investors, some favouring established giants like Nvidia, while others look to secondary beneficiaries such as utilities and infrastructure providers.
Acknowledging AI stocks’ optimism, Citi’s strategists emphasise that current stock prices imply high expectations.
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