Citadel Says AI Stocks May Rebound After US Midterms as Investor Cash Returns
Summary
- Citadel said investor money could flow back into AI-related stocks after the US midterm elections as political uncertainty eases.
- It said Wall Street sees the midterm election outcome as a variable that could affect AI industry regulation and trigger additional selling pressure on semiconductor stocks.
- It said retail investors are using the pullback in technology stocks, semiconductor stocks, AI cloud infrastructure, and memory-related shares as a buying opportunity.
Forecast Trend Report by Period
Political uncertainty is set to ease after the US midterm elections conclude next month, potentially drawing investor money back into artificial intelligence-related stocks.
Bloomberg reported on October 20 that Scott Rubner, Citadel Securities' head of equity and equity derivatives strategy, told the "Future of Global Markets" conference in New York that AI-related shares could once again outperform the broader market after the US midterms.
Rubner said investors see the election as a key hurdle before adding risk exposure. Some clients would prefer to buy after the vote even if stocks rise beforehand, reflecting a cautious tone toward new investments ahead of the political event.
The election result is a key variable for the direction of AI regulation and major industrial policy. Wall Street is also watching whether a Democratic sweep of both chambers of Congress would tighten regulation and add selling pressure to semiconductor stocks.
Technology shares have recently weakened on political uncertainty and higher-rate concerns. The Philadelphia Semiconductor Index fell for eight straight trading sessions through October 16, dropping about 16%. Over the same period, the tech-heavy Nasdaq 100 fell 5.5%, while the S&P 500 also showed weakness.
Investor responses, however, are diverging. Rubner said retail investors used the recent decline as a buying opportunity, purchasing semiconductor, AI cloud infrastructure and memory-related stocks last week at the fastest pace in 16 weeks. Institutional investors, by contrast, have continued to cut risk exposure.
The relative performance of AI-related stocks has also shifted sharply. Rubner said a momentum strategy that bought the strongest-rising stocks returned 70% from January through June 22, but later reversed and turned negative for the year. Over the same period, leading AI stocks outperformed weaker AI names by more than 100 percentage points before that relative performance also turned negative, he added.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.