Citigroup analysts issued a note today that they expect the S&P 500 to end the year at 4,000. However, based on their track record of S&P 500 predictions, this may not be the last prediction they make — they don’t often stick to their predictions like some other analysts do — and this may be incorrect as many of their recent predictions in the S&P 500 have been. Spoiler alert: They were largely wrong about 2023, and most of 2022.
Citi’s 2022 S&P 500 Price Target(s):
Without a timeline, this sporadic set of changes may be somewhat hard to follow.
Citigroup’s S&P 500 Price Target Timeline:
October 2021: Citigroup sets their S&P 500 price target for 2022 at 4,900.
- Price at the time of the prediction: ~4,500.
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January 2022: Citigroup hikes their S&P 500 price target for 2022 to 5,100.
- Price at the time of the prediction: ~4,700.
- At the time, Citi strategists led by Scott Chronert commented, “No doubt, the Q4 rally reflects a continuation of this past year’s earnings strength. Q4 results should support the recent market action, while 2022 outlooks should generally provide comfort in follow-through”
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March 2022: Citigroup cuts its S&P 500 price target for 2022 to 4,700.
- Price at the time of the prediction: ~4,400.
- At the time, Citigroup’s Chief Global Equity Strategy Kristina Hooper commented that the stock market environment was a “perfect storm of headwinds” — mentioning the Fed and the war in Ukraine as potential headwinds.
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June 2022: Citigroup cuts its S&P 500 price target for 2022 to 4,200.
- Price at the time of the prediction: ~4,100.
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In September of 2022, we put out this infographic showing where the big analysts, institutions, and banks stood in comparison.
October 2022: Citigroup cuts its S&P 500 price target for 2022 to 4,000.
- Price at the time of the prediction: ~3,790.
- Simultaneously, this is when Citigroup set an initial 2023 price target for the S&P 500 of 3,900.
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Later, they adjusted that 2023 price target to 4,000.
Citi S&P 500 Price Target: 4,000
Throughout 2023, Citigroup has been in the camp that the S&P 500 is likely to end the year at 4,000, with analysts having a somewhat more bearish tilt as the S&P 500 continued to climb throughout 2023. Today, Citigroup’s Scott Chronert said, “recession risk remains high” and that he isn’t buying the rally in the S&P 50, referring to the AI driven growth around the stock market as “euphoria.” With that said, Citigroup admits…
Source: Bloomberg Markets
On Euphoria, Hype, and AI — Is AI Hype, or the Greatest Innovation of Our Time?
When someone sees the stock market rally, phrases like “euphoria” and “bubble” often come up. This was likely true of the metaverse hype of 2022, which provided no immediate material value to company balance sheets. The same may have been largely true of the crypto hype that occurred around the same time — while crypto is a viable innovation that is almost certainly here to stay, it wasn’t likely to cut margins or give a meaningful “boost” to most companies — it also had it’s own issues with volatility of the currency.
“AI […] is every bit as important as the PC, as the internet.”
Bill Gates
However, it’s worth asking, is artificial intelligence — something that Bill Gates recently said was “as important as the internet itself” — something that has already led to significant profit margin boosts for companies in many diverse sectors, really the same as prior “hype”? Or are these analysts being shortsighted? Are these analysts attempting to compare prior rallies which occurred due to simple market mechanics with a rally driven off of the potential greatest innovation of our lifetimes?
To add one final question to the mix, perhaps it’s worth asking whether an analyst’s past track record of making predictions (or sticking to predictions) should factor into the weight of their words when making future predictions.
