Citi-analyst: Time for small and mid-caps thanks to AI and FED cuts!

Citi-analyst: Time for small and mid-caps thanks to AI and FED cuts!

On October 3, 2025, Scott Chronert, US equity strategist at Citi, expressed optimistic perspectives for small and medium-sized shares (SMID). According to Chronert, the market conditions could soon speak in favor of this share category. He points out that the overall economic fundamental data appear "very stable", which is promoted by the influence of artificial intelligence (AI). The signs indicate that the earnings recession of the SMID shares ends.

Chronert emphasizes that small and medium -sized stocks are more economically more sensitive than large values. Despite the typical investment patterns that are favored for small companies after a recession, the current situation shows characteristics of a "gentle landing". The current interest rate reductions through the Federal Reserve could also support the SMID sector.

Growing profit growth

The financial reports for the second quarter presented considerable results, with the first positive turning point in profit growth in SMID shares in two years. This suggests the potential for continuing growth. Chronert emphasizes that Citi has reduced its weights in the area of ​​communication services from "overweight" to "market weight".

Overall, Citi's measures and analyzes indicate that investors should pay attention to the upcoming developments in the Smid sector, especially in view of the announced monetary relief. Chronert's assessment could thus be signaled to a strategy change for investors at the markets who are looking for a changing economic environment according to return.

These developments and considerations are further put to the test by feedback and analyzes in the industry. It remains exciting to see how the trends around small and medium -sized companies will develop in the coming months.

For more information on Chronerts analyzes and market developments, you can use the complete analysis Daily Hodl see.