Market not pricing in the magnitude and duration of AI buildout remaining: Citi's Scott Chronert
Speakers
Scott Chronert
— Managing Director, Citi
Summary
Scott Chronert, Citi's U.S. equity strategist, discusses equity valuations, the impact of rising oil and bond yields, and the AI investment cycle. He highlights that semiconductors have become attractive on valuation and believes the market has not fully priced in the remaining magnitude and duration of AI buildout.
- Scott notes that rising oil and bond yields are a concern but may not affect Q1 earnings yet.
- He sees the implied 5-year earnings CAGR of 12% as historically high, placing a heavy burden on fundamentals.
- Semiconductor valuations have improved as earnings growth has outpaced price action.
- Picks-and-shovels and hardware areas are the highest-conviction components of the AI buildout.
- Scott believes the market has not fully discounted the remaining magnitude and duration of AI spending.
Trade Ideas
Semis attractive, AI buildout not priced
The semiconductor part of the market has become attractive on valuation (PEG ratios have compressed) because earnings growth has been stronger than price action. The picks-and-shovels play on the AI buildout, alongside hardware, remains the highest-conviction component. The market has not yet fully priced in the magnitude and duration of the remaining AI buildout, which supports further upside for semiconductors.
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This CNBC video, published April 29, 2026, features Scott Chronert discussing SMH. 1 trade idea extracted by AI with direction and confidence scoring.
Speakers: Scott Chronert · Tickers: SMH