Strategists at investment firm Citigroup (C) are warning that U.S. technology stocks could face growing risks as investors take profits from this year’s strong rally, according to Bloomberg. The Nasdaq 100 (QQQ) is seen as the most vulnerable after jumping 46% from April lows due to the excitement around artificial intelligence. Indeed, the index reached another record high on Monday after chipmaker Advanced Micro Devices (AMD) announced a blockbuster deal with OpenAI.
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As a result, Citi strategist Chris Montagu said in a note that “profit-taking risks have rapidly risen across markets, and are particularly elevated for Nasdaq, potentially hampering further upside.” It is worth noting that the AI boom has continued to lift stocks by keeping investors focused on growth rather than issues like trade tariffs. This has led the Nasdaq 100 to 30 record closes so far this year, compared with 45 for all of last year.
But even with those risks, bullish sentiment remains high across Wall Street. In fact, Goldman Sachs (GS) reported that optimism among its clients is at the strongest level since last December, with 40% expecting the S&P 500 (SPY) to outperform this month. Barclays (BCS) also noted that investor sentiment has reached exuberant levels, while Bloomberg Intelligence said that its tracker has entered a “manic” zone that has historically preceded weaker returns. Still, Citi found that investors are adding new long positions in U.S. stocks, with confidence rising in both large- and small-cap names.
Is QQQ Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on QQQ based on 91 Buys, 11 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average QQQ price target of $665.77 per share implies 10.2% upside potential.
