Citadel Sees AI Stocks Rebounding After U.S. Midterms, Expects Investor Inflows to Return
Summary
- Scott Rubner said investor money could flow back into AI-related stocks after the U.S. midterm elections as political uncertainty eases.
- On Wall Street, investors say that if the Democratic Party controls both chambers of Congress, tighter AI industry regulation could trigger additional selling pressure on semiconductor stocks.
- Rubner said retail investors have been buying semiconductor, AI cloud infrastructure, and memory-related stocks heavily during the recent pullback, while institutional investors are reducing risk exposure.
Forecast Trend Report by Period
Investor money could flow back into artificial intelligence stocks starting next month as political uncertainty eases after the U.S. midterm elections.
Bloomberg reported on October 20 that Scott Rubner, Citadel Securities’ head of equity and equity derivatives strategy, told the “Future of Global Markets” conference in New York that AI-related shares could again outperform the broader market after the U.S. midterms.
Rubner said investors view the midterms as a key hurdle before adding to risk assets. Some clients have told him they would rather buy after the election, even if stocks rise first. The political event has made investors cautious about putting fresh money to work.
The election outcome is a key variable for the direction of AI regulation and broader industrial policy. On Wall Street, some investors believe that if Democrats control both the House and Senate, tighter regulation could add selling pressure to semiconductor stocks.
Technology shares have recently weakened amid political uncertainty and concern over interest rates. The Philadelphia Semiconductor Index fell for eight straight sessions through October 16, dropping about 16%. Over the same period, the tech-heavy Nasdaq 100 fell 5.5%, while the S&P 500 also remained under pressure.
Investor behavior, however, has begun to diverge. Rubner said retail investors used the recent pullback as a buying opportunity, making their biggest purchases in 16 weeks last week of semiconductor, AI cloud infrastructure and memory-related stocks. Institutional investors, by contrast, have continued to reduce risk exposure.
The relative performance of AI stocks has also shifted sharply. Rubner said a momentum strategy that bought the market’s strongest names returned 70% from January through June 22 this year, before turning lower and slipping into negative territory for the year. Over the same period, leading AI stocks outperformed weaker AI names by more than 100 percentage points, but that relative performance has since turned negative.
