The latest market wobble has claimed another Wall Street believer. Citi is giving up on the big tech trade as hyperscalers and growth plays underperform amid a sharp market rotation, according to MarketWatch.
Citi’s big tech trade unwind: rotation hits hyperscalers
The bank’s pullback comes as investors rotate away from the concentrated megacap technology trade that has powered markets for years. Hyperscalers — the giant cloud and AI infrastructure players — along with high-growth names have lagged as the market reprices enthusiasm for the AI buildout.
The caution fits a broader pattern from Citi’s strategists in recent weeks. Stuart Kaiser, the bank’s head of U.S. equity-trading strategy, warned in late October that the latest selloff does not yet offer a “buyable dip”, arguing the slide could have further to run before equities offer an attractive entry point. The bank’s quantitative strategy team has also flagged a late-cycle shift in its macro model, favoring emerging-market stocks over U.S. equities.
What the rotation means for investors
Citi’s move reflects a growing debate on Wall Street about whether the AI investment boom is maturing. The bank’s strategists have argued that the old Magnificent Seven framework no longer captures the AI trade, with performance diverging sharply: some tech giants have rallied while others, including major chipmakers, have begun to underperform on valuation concerns.
For now, the message from Citi is restraint. The bank is choosing to step back from the biggest, most crowded trade on Wall Street — and waiting for a better moment to return.
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Source: MarketWatch — read the full story there.
