Citigroup Flags AI Safety Concerns as Potential Threat to Stock Rally

Citigroup's head of U.S. equity trading strategy, Stuart Kaiser, is sounding the alarm on potential risks to the stock market rally. He warns that growing concerns over AI safety could slow down AI model development and weigh on corporate earnings, which could put pressure on U.S. stocks.

Kaiser also highlighted rising bond yields, surging oil prices, and the upcoming November midterm elections as headwinds for stocks. The bank expects the S&P 500 to remain near its recent highs but sees a potential 3-5% pullback that could attract buyers.

Citi identified Microsoft (MSFT), Alphabet (GOOGL), Meta (META), and Amazon (AMZN) as stocks sensitive to these risks. Analysts currently have a Strong Buy consensus rating on all four stocks, with Amazon having the highest average analyst price-target upside at 31.8%.