The Market Is in a ‘Boom,’ Not a ‘Bubble,’ Says Citigroup

Citigroup’s (C) head of U.S. equity strategy, Scott Chronert, believes that the stock market is in a “boom” phase rather than a bubble, and he is entering the new year with a positive outlook. In an interview with CNBC, Chronert said that his team is taking a “glass half full” view, especially when looking at the impact of artificial intelligence on markets. While he admitted that investors may be pricing in next year’s growth earlier than usual, he stated that market conditions still look supportive. Overall, he described the setup as strong and constructive rather than overheated.

Unsurprisingly, this optimism is reflected in Citigroup’s earnings forecast. The firm is at the top end of Wall Street expectations, with an estimated earnings growth rate of 3.2% for the coming year. A major reason is the continued strength of mega-cap technology stocks. More specifically, he expects Alphabet (GOOGL), Amazon (AMZN), Meta (META), Microsoft (MSFT), Nvidia (NVDA), Tesla (TSLA), and Apple (AAPL) to keep delivering solid results through earnings beats and higher guidance.

It’s worth noting that these companies make up about 40% of the market’s total value and remain critical to overall earnings growth. In addition to big tech, Chronert sees another tailwind forming. He expects earnings growth to expand into sectors that have lagged so far, including energy (XLE), materials (XLB), REITs (XLRE), and utilities (XLU). This year, those areas have weighed on overall index earnings. Looking ahead, however, Chronert believes they are positioned to recover and start contributing positively.

Which Mega-Cap Tech Stock Is the Better Buy?

Turning to Wall Street, out of the mega-cap tech stocks mentioned above, analysts think that NUE stock has the most room to run. In fact, NVDA’s average price target of $262.79 per share implies more than 39.8% upside potential.

See more NVDA analyst ratings