A US equity strategist at Citi believes the market rotation could soon give a big boost to small-cap stocks.
Scott Cronert He says In a new interview with CNBC, he said artificial intelligence (AI) trading is still attractive right now but recommends getting more exposure in small, non-AI businesses.
“The issue here is less about conviction and profits and more about keeping the AI infrastructure trade going, and that will be an ongoing discussion. When we look at the market setup, it’s pretty simple. We want to get exposure to this Nasdaq component where the earnings momentum is very strong, but we want to prevent it by reducing capital to small cap. This is probably the most leveraged sector other than AI and expansion trading. The other sectors — industrial, financials, consumer discretionary — they all have stories we could talk about, but we think this cap trade Maybe it has some legs.
The strategist also says his outlook is bullish for the S&P 500 through 2027.
“When we look at the overall S&P setup, we’re really comfortable with our ahead-of-expectations earnings forecast for this year. We’re at 350 (earnings per share) for the year. The consensus is 341. We feel good about our 350 and it could be conservative — 400 for next year (is) definitely the horizon line.”
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