Equity Gains From AI Set to Widen, Citigroup's Badoy Says

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Transcript

00:00Just walk us through your take on tech. So I think, Kriti, it's really important.

00:07First, let's look back at the last few months. Obviously, we've had a rally which has been

00:15sort of even across various nations, various markets. And really, what we believe,

00:22we were just out yesterday with our view for the next quarter. And we really believe that

00:27we're likely to see consolidation. So we're sort of mildly positive, expecting gains globally for

00:33about 5%. But what's really important is we believe it's going to be theme-based. So we don't

00:38expect, well, we've seen before very different outcomes for EPS growth. We expect that actually

00:44a much more broad-based growth. And I think AI is a theme that plays into that. And we expect

00:51probably a widening of the gains from AI across. So that's actually our view on AI.

00:59When it comes to AI, there's also a question here of whether valuations even matter,

01:03because we're starting to talk about that in the defense place as well, maybe even healthcare

01:06a little bit. When I see tech, healthcare, and defense all drag this market down, which is what

01:11we're seeing this morning, I wonder if it's a valuation question. Elise, is that an appropriate

01:16question to be asking at a time when being short is very cheap?

01:21And it is a question we get most days, because valuations are stretched in these areas, obviously.

01:28You know, we are almost all-time high. However, I mean, that might not be true about Europe.

01:34Obviously, Europe in particular, you still have about a 30% discount to the US. The average

01:38was more like 15%. So you might have some opportunities there. The question is obviously the catalyst

01:45and where the true innovation is seen as being done. I think the way we interpret that is we

01:51will look at EPS delivery and earnings delivery. Remember, we're just we run the corner, we have

01:57Q3. But looking into 25 and 26 delivery, we think the market is kind of priced for perfection. So we

02:04need that earnings delivery. There's no sign that we can't have it. But I think this is an important

02:10point to watch, i.e., this valuation can only success, you know, sustain delivery. Now,

02:17I hear you're going to say, well, actually, how much earnings is there around AI? And actually,

02:20a lot of it is the future. But still, you know, in a number of subsectors that are impacted,

02:26you need to see that delivery happening.

02:28The opportunity is a little bit about more time. I'm going to say, well, if I land a lot of

02:33things, then come to see that delivery happens. By the way we are getting closer to the

02:34part of the right, we're getting closer to the economy, which is a lot of things. You can

02:37actually see that. You can see that there are still many types of things. So if we do

02:38what we're doing, it will fill out. You can see that there are still many types of things.

02:40We go to the table. Let's be sure. You can see that there are still many types of things.

02:40What do we do?

02:42We're getting closer to the table right now, and I think that I need to take a little bit for

02:43to see that there are still many types of things. You can pay attention to that.

02:45I'll tell you about it. I think that there's exactly what the problem at all right.