Citi Strategists Cut US Stocks, Upgrade Europe After AI Turmoil Bloomberg · Bloomberg Olivia Levieux and Rose Henderson Mon, November 9, 2026 at 4:55 AM EST 2 min read ^GSPC +0.31% ^NDX +1.35% ^STOXX +0.82% CL=F -1.60% (Bloomberg) -- Citigroup Inc. strategists downgraded US stocks and the global tech sector, while upgrading European equities because of their lower exposure to AI turbulence.
Nvidia CEO's Affair Engulfs AI Giant in Chinese Spying Probe
Georgia State Race Reversed After Votes Surface on Memory Card
Several Senate Republicans Call for Delaying Leadership Election
CoreWeave Asks Texas Governor-Elect for Data Center Cooperation
Rubio Weighs Leaving Administration After GOP's Midterm Loss
The Citi team led by Beata Manthey acted after a dramatic week in global markets triggered by the Democratic sweep in US midterm elections. Concerns over tighter AI regulation pushed the S&P 500 to its biggest weekly loss since April 2025, while $2.3 trillion was wiped off the Nasdaq 100 last Thursday alone. Europe's Stoxx 600 ended the week 0.2% higher.
The strategists downgraded the US and tech to neutral, as they raised Europe, excluding the UK, to overweight, also citing the region's greater benefit from falling oil prices. Citi remains positive about the outlook for AI, but sees scope for further selling before sentiment stabilizes and earnings revisions provide a firmer foundation for the trade, Manthey said in a client note.
"We worry that positioning on key indices, such as the Nasdaq, could reset lower into net-short territory," Manthey wrote. "While the selloff has been most aggressive in Tech, volatility has been broad-based."
Europe's diversified stock market has emerged as an attractive trade as global investors seek to reduce their exposure to artificial intelligence-linked stocks. Its mix of steady industrial names, banks and defensive stalwarts helped the region avoid the worst of last week's turmoil.
In a separate note, Goldman Sachs Group Inc. strategists highlighted that while Europe captured less of the AI upside, that is now becoming an advantage.
AI infrastructure represents about 15% of the Stoxx 600 and less than a quarter of the 9% earnings growth for the benchmark expected for 2027, the Goldman team including Guillaume Jaisson said. By contrast, those stocks are some 40% of the S&P 500 and more than two-thirds of next year's projected earnings growth.
"This lower concentration provides diversification when the AI trade reverses: across the eight largest AI-led selloffs since 2023, Europe outperformed the US every time," the Goldman team said.
The Citi strategists said their global sector strategy is now a barbell of economically linked cyclicals and defensive stocks. They upgraded healthcare to overweight, where it joins materials.
Manthey and her colleagues said their market targets remain positive for next year, as lower interest rates, resilient economic data and the potential for easing geopolitical risks should provide support.
China's Bad-Debt Collectors Chase After 100 Million Defaulters
Hyatt Is the All-Inclusive Resort King, If That's Your Thing
The Crypto Mogul Behind Trading Powerhouse Hyperliquid
