Citi Abandons AI Growth Stocks After Market Rotation

Citigroup is abandoning its long positions in hyperscalers and growth stocks following a failed prediction that artificial intelligence-focused equities would rally. Stuart Kaiser, the head of equity-trading strategy at Citi, acknowledged that his expectations for quarterly results and low investor exposure to lift AI stocks did not occur.

The decision follows a sharp market rotation away from growth names. In the week preceding October 19, the Nasdaq Composite fell 4.5%, while the information technology sector dropped more than 6%, marking its steepest decline since April 2025.

Other industry indicators mirrored this downturn. CoreWeave saw its stock value plunge more than 25% during the same period due to debt concerns. Simultaneously, traders at Goldman Sachs reported that AI credit spreads and hyperscalers reached their widest levels of the year.