It’s time to buy the next leg of the AI story. Think global, says Citi, offering these stock picks.

By Barbara Kollmeyer

“No rush.”

That was Federal Reserve Gov. Chris Waller pounding the table over the need for patience on interest rate cuts in a much-anticipated speech on Wednesday night.

Some described that as a “hawkish sledgehammer,” after hopeful signals from Fed ChairJerome Powell a week ago, and that could make for a rough final trading session of the month Thursday.

Rain on the rate-cut parade comes as red flag warnings pop up across Wall Street over momentum stocks like artificial intelligence darling Nvidia /zigman2/quotes/200467500/composite NVDA +6.18% which has been in the winner’s circle and an S&P 500 index driver in the past year or more.

But by now, investors know that even if AI is in a frenzy right now, the theme is here to stay. And our call of the day from a team of Citigroup strategists led by Drew Pettit say it’s “time to buy the next leg of the artificial intelligence trade.”

Firstly, more caution. They warn of “micro bubble risks,” due to sharp gains in certain pockets of the market, thus “investors should be discerning within the theme, especially for core holdings.”

They stress that investors have been overlooking lots of international names for U.S. stocks, even if the latter has been driving AI year-to-date returns. Their deep dive found “more stocks are contributing to performance upside, and expectations are for earnings growth to be better distributed across the AI value chain in the years ahead.”

Pettit and his team say now is “timely” for growth and value investors to broaden exposure, especially given the dilemmas they each face. For example, growth fans have to figure out what to do with stocks that have seen hefty gains.

“Conversely, their bearish counterparts may be worried about bubble risks in highfliers, like we saw in the unwinding of lower-quality U.S. names in 2022, even though they see structural gains for the theme longer term,” said Pettit and his team.

And value managers struggle with the largely growth-focused AI landscape, though by broadening out the theme, “pockets of value” can be found, says Citi. “The key is looking for names where AI exposures aligns with improving fundamentals.”

So their advice for growth investors is to take the “AI-at-a-reasonable-price approach,” while value investors should look at lower-multiple, or potential undervalued names where margins should expand.

“The end results provide broader regional and value chain exposure, lower beta relative to tech-heavy indices, and more attainable implicit fundamental expectations.”

As for the names flagged by Citi, they break down the stocks mapped out to AI through value chains — enablers, creators and users — offering two screens.

The first screen is the AI at a reasonable price basket. For example, on the creators list they flag AppLovin /zigman2/quotes/226004863/composite APP +6.66% , Okta /zigman2/quotes/210420951/composite OKTA -0.69% , BILL Holdings /zigman2/quotes/215406166/composite BILL +3.21% and Smartsheet /zigman2/quotes/207006006/composite SMAR +0.53% in the U.S., Wix.com /zigman2/quotes/209382272/composite WIX -0.31% and Autoliv /zigman2/quotes/207149618/composite ALV +5.56% in Europe and Japan’s Trend Micro /zigman2/quotes/206023532/delayed JP:4704 +0.12% . Enablers: Intel /zigman2/quotes/203649727/composite INTC -9.20% , Marvell /zigman2/quotes/200053236/composite MRVL +3.17% , Broadcom /zigman2/quotes/200646538/composite AVGO +3.84% , Zillow /zigman2/quotes/204413973/composite Z +1.68% and TE Connectivitiy /zigman2/quotes/205324491/composite TEL -0.19% in the U.S., BE Semiconductors /zigman2/quotes/206329769/delayed NL:BESI -4.12% in Europe and Australia’s Goodman Group /zigman2/quotes/200824536/delayed AU:GMG -1.75% . Users: Block, Veeva Systems Expedia Mastercard in the U.S., Thales, Europe’s Airbus and ABB and Japan’s Nidec and Panasonic.

For the AI value basket, in the creator segment they like U.S.-based Aptiv /zigman2/quotes/204162392/composite APTV +1.54% , DocuSign /zigman2/quotes/205992027/composite DOCU -0.26% , Electronic Arts /zigman2/quotes/206954087/composite EA +0.46% , France’s Capgemeni /zigman2/quotes/206891951/delayed FR:CAP +0.99% and Japan’s Toyota /zigman2/quotes/203803129/delayed JP:7203 +0.37% /zigman2/quotes/200537742/composite TM +0.60% . On the enabler list — HP /zigman2/quotes/203461582/composite HPQ -0.46% , SS&C Technologies /zigman2/quotes/209302304/composite SSNC -0.11% and NetApp /zigman2/quotes/209297588/composite NTAP +0.39% in the U.S., Orange /zigman2/quotes/201008076/delayed FR:ORA -0.86% , Royal KPN /zigman2/quotes/200683801/delayed NL:KPN -0.29% and Hexagon /zigman2/quotes/203909320/delayed SE:HEXA.B -1.52% in Europe and Canon /zigman2/quotes/207639533/delayed JP:7751 +3.64% and Japan’s Nippon Telegraph and Telephone /zigman2/quotes/200718273/delayed JP:9432 -0.71% . Users: Bank of New York Mellon /zigman2/quotes/200171276/composite BK +0.24% , Bank of America /zigman2/quotes/200894270/composite BAC -0.21% , Booking Holdings /zigman2/quotes/203576210/composite BKNG +0.53% in the U.S., Siemens /zigman2/quotes/205905025/delayed XE:SIE +2.26% , Airbus /zigman2/quotes/208224336/delayed FR:AIR -0.92% , Zurich Insurance /zigman2/quotes/208758696/delayed CH:ZURN -0.61% in Europe and Japan’s Nitto Denko /zigman2/quotes/203719953/delayed JP:6988 +2.41% .

Markets

U.S. stocks SPX COMP are steady as benchmark Treasury yields BX:TMUBMUSD10Y rise. The dollar DXY was up, along with oil prices /zigman2/quotes/211629951/delayed CL.1 -0.20% and gold /zigman2/quotes/210034565/delayed GC00 +0.10% was higher at around $2,226 an ounce.

U.S. bond markets will close Thursday at 2 p.m. ET ahead of the Easter break, with U.S. equity and bond markets — and many others across the world — shut all day Friday.

/zigman2/quotes/200467500/composite

Add to watchlist NVDA

NVIDIA Corp.

US : U.S.: Nasdaq

$ 877.35

+51.03 +6.18%

Volume: 55.10M

April 26, 2024 4:00p

P/E Ratio

73.50

Dividend Yield

0.02%

Market Cap

$2193.37 billion

Rev. per Employee

$2.06M

/zigman2/quotes/226004863/composite

Add to watchlist APP

AppLovin Corp.

US : U.S.: Nasdaq

$ 73.82

+4.61 +6.66%

Volume: 5.38M

April 26, 2024 4:00p

P/E Ratio

73.65

Dividend Yield

N/A

Market Cap

$25.47 billion

Rev. per Employee

$1.88M

/zigman2/quotes/210420951/composite

Add to watchlist OKTA

Okta Inc. Cl A

US : U.S.: Nasdaq

$ 92.29

-0.64 -0.69%

Volume: 793,448

April 26, 2024 4:00p

P/E Ratio

N/A

Dividend Yield

N/A

Market Cap

$15.45 billion

Rev. per Employee

$383,040

/zigman2/quotes/215406166/composite

Add to watchlist BILL

BILL Holdings Inc.

US : U.S.: NYSE

$ 62.44

+1.94 +3.21%

Volume: 1.02M

April 26, 2024 4:00p

P/E Ratio

N/A

Dividend Yield

N/A

Market Cap

$6.56 billion

Rev. per Employee

$472,835

/zigman2/quotes/207006006/composite

Add to watchlist SMAR

Smartsheet Inc.

US : U.S.: NYSE

$ 38.28

+0.20 +0.53%

Volume: 1.01M

April 26, 2024 4:00p

P/E Ratio

N/A

Dividend Yield

N/A

Market Cap

$5.26 billion

Rev. per Employee

$287,789

/zigman2/quotes/209382272/composite

Add to watchlist WIX

Wix.com Ltd.

US : U.S.: Nasdaq

$ 120.81

-0.37 -0.31%

Volume: 417,880

April 26, 2024 4:00p

P/E Ratio

229.94

Dividend Yield

N/A

Market Cap

$6.72 billion

Rev. per Employee

$294,543

/zigman2/quotes/207149618/composite

Add to watchlist ALV

Autoliv Inc.

US : U.S.: NYSE

$ 122.29

+6.44 +5.56%

Volume: 1.50M

April 26, 2024 4:00p

P/E Ratio

19.04

Dividend Yield

2.22%

Market Cap

$10.11 billion

Rev. per Employee

$150,740

/zigman2/quotes/206023532/delayed

Add to watchlist JP:4704

Trend Micro Inc.

JP : Japan: Tokyo

¥ 7,778.00

+9.00 +0.12%

Volume: 548,400

April 26, 2024 3:00p

P/E Ratio

100.34

Dividend Yield

2.30%

Market Cap

¥1056.41 billion

Rev. per Employee

¥33.46M

/zigman2/quotes/203649727/composite

Add to watchlist INTC

Intel Corp.

US : U.S.: Nasdaq

$ 31.88

-3.23 -9.20%

Volume: 119.74M

April 26, 2024 4:00p

P/E Ratio

33.21

Dividend Yield

1.57%

Market Cap

$134.79 billion

Rev. per Employee

$442,604

/zigman2/quotes/200053236/composite

Add to watchlist MRVL

Marvell Technology Inc.

US : U.S.: Nasdaq

$ 69.62

+2.14 +3.17%

Volume: 11.54M

April 26, 2024 4:00p

P/E Ratio

N/A

Dividend Yield

0.34%

Market Cap

$60.29 billion

Rev. per Employee

$837,418

/zigman2/quotes/200646538/composite

Add to watchlist AVGO

Broadcom Inc.

US : U.S.: Nasdaq

$ 1,344.07

+49.65 +3.84%

Volume: 2.41M

April 26, 2024 4:00p

P/E Ratio

49.82

Dividend Yield

1.56%

Market Cap

$622.87 billion

Rev. per Employee

$1.94M

/zigman2/quotes/204413973/composite

Add to watchlist Z

Zillow Group Inc. Cl C

US : U.S.: Nasdaq

$ 43.67

+0.72 +1.68%

Volume: 3.00M

April 26, 2024 4:00p

P/E Ratio

N/A

Dividend Yield

N/A

Market Cap

$10.28 billion

Rev. per Employee

$310,554

/zigman2/quotes/205324491/composite

Add to watchlist TEL

TE Connectivity Ltd.

US : U.S.: NYSE

$ 140.21

-0.27 -0.19%

Volume: 2.65M

April 26, 2024 4:00p

P/E Ratio

12.84

Dividend Yield

1.85%

Market Cap

$42.96 billion

Rev. per Employee

$178,156

/zigman2/quotes/206329769/delayed

Add to watchlist NL:BESI

BE Semiconductor Industries N.V.

NL : Netherlands: Euronext Amsterdam

€ 130.40

-5.60 -4.12%

Volume: 790,185

April 26, 2024 5:55p

P/E Ratio

60.91

Dividend Yield

1.65%

Market Cap

€10.53 billion

Rev. per Employee

€340,881

/zigman2/quotes/200824536/delayed

Add to watchlist AU:GMG

Goodman Group

AU : Australia: Sydney

$ 30.81

-0.55 -1.75%

Volume: 4.44M

April 26, 2024 4:10p

P/E Ratio

250.69

Dividend Yield

0.97%

Market Cap

$58.51 billion

Rev. per Employee

$2.05M

/zigman2/quotes/204162392/composite

Add to watchlist APTV

Aptiv PLC

US : U.S.: NYSE

$ 71.21

+1.08 +1.54%

Volume: 2.11M

April 26, 2024 4:00p

P/E Ratio

6.88

Dividend Yield

0.00%

Market Cap

$19.42 billion

Rev. per Employee

$130,201

/zigman2/quotes/205992027/composite

Add to watchlist DOCU

DocuSign Inc.

US : U.S.: Nasdaq

$ 57.20

-0.15 -0.26%

Volume: 1.12M

April 26, 2024 4:00p

P/E Ratio

160.85

Dividend Yield

N/A

Market Cap

$11.75 billion

Rev. per Employee

$403,784

/zigman2/quotes/206954087/composite

Add to watchlist EA

Electronic Arts Inc.

US : U.S.: Nasdaq

$ 127.90

+0.59 +0.46%

Volume: 1.22M

April 26, 2024 4:00p

P/E Ratio

32.29

Dividend Yield

0.59%

Market Cap

$34.19 billion

Rev. per Employee

$564,552

/zigman2/quotes/206891951/delayed

Add to watchlist FR:CAP

Capgemini SE

FR : France: Euronext Paris

€ 203.10

+2.00 +0.99%

Volume: 219,551

April 26, 2024 5:55p

P/E Ratio

21.67

Dividend Yield

1.67%

Market Cap

€34.98 billion

Rev. per Employee

€66,155

/zigman2/quotes/203803129/delayed

Add to watchlist JP:7203

Toyota Motor Corp.

JP : Japan: Tokyo

¥ 3,510.00

+13.00 +0.37%

Volume: 30.26M

April 26, 2024 3:00p

P/E Ratio

10.55

Dividend Yield

1.85%

Market Cap

¥47554.07 billion

Rev. per Employee

¥116.50M

/zigman2/quotes/200537742/composite

Add to watchlist TM

Toyota Motor Corp. ADR

US : U.S.: NYSE

$ 226.71

+1.35 +0.60%

Volume: 242,281

April 26, 2024 4:00p

P/E Ratio

9.67

Dividend Yield

1.76%

Market Cap

$302.35 billion

Rev. per Employee

$827,191

/zigman2/quotes/203461582/composite

Add to watchlist HPQ

HP Inc.

US : U.S.: NYSE

$ 28.00

-0.13 -0.46%

Volume: 5.36M

April 26, 2024 4:00p

P/E Ratio

8.18

Dividend Yield

3.94%

Market Cap

$27.40 billion

Rev. per Employee

$914,741

/zigman2/quotes/209302304/composite

Add to watchlist SSNC

SS&C Technologies Holdings Inc.

US : U.S.: Nasdaq

$ 61.24

-0.07 -0.11%

Volume: 1.58M

April 26, 2024 4:00p

P/E Ratio

24.32

Dividend Yield

1.57%

Market Cap

$15.13 billion

Rev. per Employee

$209,590

/zigman2/quotes/209297588/composite

Add to watchlist NTAP

NetApp Inc.

US : U.S.: Nasdaq

$ 101.33

+0.39 +0.39%

Volume: 2.12M

April 26, 2024 4:00p

P/E Ratio

23.00

Dividend Yield

1.97%

Market Cap

$20.91 billion

Rev. per Employee

$514,333

/zigman2/quotes/201008076/delayed

Add to watchlist FR:ORA

Orange S.A.

FR : France: Euronext Paris

€ 10.40

-0.09 -0.86%

Volume: 7.02M

April 26, 2024 5:55p

P/E Ratio

12.21

Dividend Yield

6.93%

Market Cap

€27.64 billion

Rev. per Employee

€321,838

/zigman2/quotes/200683801/delayed

Add to watchlist NL:KPN

Royal KPN N.V.

NL : Netherlands: Euronext Amsterdam

€ 3.43

-0.01 -0.29%

Volume: 10.53M

April 26, 2024 5:55p

P/E Ratio

16.12

Dividend Yield

4.38%

Market Cap

€13.50 billion

Rev. per Employee

€559,338

/zigman2/quotes/203909320/delayed

Add to watchlist SE:HEXA.B

Hexagon AB Series B

SE : Sweden: Stockholm

kr 120.20

-1.85 -1.52%

Volume: 5.76M

April 26, 2024 5:29p

P/E Ratio

33.33

Dividend Yield

1.26%

Market Cap

kr322.66 billion

Rev. per Employee

kr2.55M

/zigman2/quotes/207639533/delayed

Add to watchlist JP:7751

Canon Inc.

JP : Japan: Tokyo

¥ 4,214.00

+148.00 +3.64%

Volume: 10.82M

April 26, 2024 3:00p

P/E Ratio

15.65

Dividend Yield

3.56%

Market Cap

¥4219.21 billion

Rev. per Employee

¥24.82M

/zigman2/quotes/200718273/delayed

Add to watchlist JP:9432

Nippon Telegraph & Telephone Corp.

JP : Japan: Tokyo

¥ 168.20

-1.20 -0.71%

Volume: 219.86M

April 26, 2024 3:00p

P/E Ratio

11.99

Dividend Yield

2.97%

Market Cap

¥14336.58 billion

Rev. per Employee

¥39.22M

/zigman2/quotes/200171276/composite

Add to watchlist BK

Bank of New York Mellon Corp.

US : U.S.: NYSE

$ 57.32

+0.14 +0.24%

Volume: 2.06M

April 26, 2024 4:00p

P/E Ratio

13.95

Dividend Yield

2.93%

Market Cap

$42.86 billion

Rev. per Employee

$678,165

/zigman2/quotes/200894270/composite

Add to watchlist BAC

Bank of America Corp.

US : U.S.: NYSE

$ 37.83

-0.08 -0.21%

Volume: 28.67M

April 26, 2024 4:00p

P/E Ratio

13.08

Dividend Yield

2.54%

Market Cap

$297.82 billion

Rev. per Employee

$854,300

/zigman2/quotes/203576210/composite

Add to watchlist BKNG

Booking Holdings Inc.

US : U.S.: Nasdaq

$ 3,521.08

+18.60 +0.53%

Volume: 146,026

April 26, 2024 4:00p

P/E Ratio

29.84

Dividend Yield

0.99%

Market Cap

$119.79 billion

Rev. per Employee

$905,297

/zigman2/quotes/205905025/delayed

Add to watchlist XE:SIE

Siemens AG

XE : Germany: Xetra

€ 177.62

+3.92 +2.26%

Volume: 1.09M

April 26, 2024 6:30p

P/E Ratio

16.08

Dividend Yield

2.65%

Market Cap

€140.11 billion

Rev. per Employee

€244,094

/zigman2/quotes/208224336/delayed

Add to watchlist FR:AIR

Airbus SE

FR : France: Euronext Paris

€ 157.06

-1.46 -0.92%

Volume: 1.45M

April 26, 2024 5:55p

P/E Ratio

32.72

Dividend Yield

1.15%

Market Cap

€124.31 billion

Rev. per Employee

€449,737

/zigman2/quotes/208758696/delayed

Add to watchlist CH:ZURN

Zurich Insurance Group AG

CH : Switzerland: SWX

CHF 439.90

-2.70 -0.61%

Volume: 280,089

April 26, 2024 5:31p

P/E Ratio

16.43

Dividend Yield

5.91%

Market Cap

CHF63.52 billion

Rev. per Employee

CHF980,714

/zigman2/quotes/203719953/delayed

Add to watchlist JP:6988

Nitto Denko Corp.

JP : Japan: Tokyo

¥ 14,255.00

+335.00 +2.41%

Volume: 757,000

April 26, 2024 3:00p

P/E Ratio

19.80

Dividend Yield

1.96%

Market Cap

¥2021.30 billion

Rev. per Employee

¥35.10M

/zigman2/quotes/211629951/delayed

Add to watchlist CL.1

Crude Oil WTI (NYM $/bbl) Front Month

US : U.S.: Nymex

$ 83.68

-0.17 -0.20%

Volume: 222,797

April 26, 2024 4:59p

/zigman2/quotes/210034565/delayed

Add to watchlist GC00

Gold Continuous Contract

US : U.S.: Nymex

$ 2,349.60

+2.40 +0.10%

Volume: 163,124

April 26, 2024 4:59p