Citi Says Sit Out Global Tech Until AI Sentiment Turns

Citi's global strategy team is advising investors to stay out of the global technology trade for now, even after a recent stretch of weakness in the sector. The bank's view is that sentiment around artificial intelligence has not recovered enough to justify leaning back into tech.

The argument rests more on positioning than on price. Citi's strategists believe tech holdings across the market still need to get cleaner, meaning the crowded bets that built up around technology and AI names have not been sufficiently unwound. Until that happens, the team is not ready to restore the overweight stance it held before. An overweight call recommends that clients hold more of a sector than its weight in a benchmark index, so dropping that view signals the bank sees little reason to add exposure at current levels.

For portfolio managers, the message is one of patience. A rebound in share prices alone would not be enough to change Citi's thinking. The bank wants to see positioning reset and AI sentiment improve first. Investors already heavily exposed to the sector may want to ask whether their holdings reflect the same concern.

The call also highlights how much of tech's recent leadership has depended on expectations for AI. When those expectations wobble, a crowded trade can unwind quickly, and the path back to favor tends to run through a cleaner set of investor positions rather than a single good week of prices. Whether Citi's caution proves justified will depend on how fast sentiment shifts and how much of that crowding actually clears.