Citi upgraded U.S. stocks to neutral from underweight, as a pause in Federal Reserve rate hikes becomes more likely and the U.S. economy fares better than expected.
Citi also pointed to strength in U.S. tech stocks as a reason for the upgrade, as excitement around artificial intelligence boosts the sector.
"AI may continue to remain a kicker, given that it is not far enough developed to disappoint expectations yet," Citi said.
We implement this view by moving the U.S. back to neutral, and in the sector section, going overweight the tech sector."
AI-related stocks such as Microsoft and Nvidia have been on fire this year, as investors try to capitalize on the latest craze.
Persons:
Dirk Willer, Jerome Powell, — CNBC's Michael Bloom
Organizations:
Citi, Microsoft, Nvidia
Locations:
U.S