Tech giants and AI helped power stocks to record highs in the first quarter of 2024. But with the second quarter about to begin, one group of analysts says the tech sector’s part of the broader market rally could soon slow.
Citi analysts have downgraded the tech sector from overweight to market-weight, Bloomberg reports. Citi’s sentiment gauge, The Levkovich Index, has hit the “euphoria” level, suggesting that returns later in the year will be lower.
Citigroup equity strategists believe the U.S. stock market has much more to offer than tech stocks. While they downgraded the tech sector to market-weight, Bloomberg reports, they indicated modest overweight in parts of the sector, including Microsoft, which still maintains its overweight status.
Despite the growth of AI, the Citi analysts kept semiconductor stocks at market-weight, including companies such as AI chipmaking giant Nvidia and Micron Technology. On the other hand, they downgraded the hardware sector to underweight, which includes tech giants such as Apple and Dell.
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