Citi Warns of ‘Frothy and Overvalued’ Sectors in Equity Markets

Core Viewpoint - Concerns about potential overvaluation in various sectors, particularly in artificial intelligence, have been raised by Citigroup's CFO Mark Mason, who acknowledges the frothiness in equity valuations and multiples [1][2]. Group 1: AI Investment and Valuation Concerns - The five largest tech companies are projected to spend approximately $371 billion this year on data centers necessary for AI model training and operation, with an estimated total infrastructure requirement of $5.2 trillion by the end of the decade according to McKinsey & Co [2]. - Mason's comments reflect a cautious stance compared to more extreme skepticism from figures like David Einhorn, who describes current valuations as "so extreme" that they are difficult to comprehend, and Harris Kupperman, who labels the situation a bubble with unlikely payback [3]. Group 2: Citigroup's AI Initiatives - Citigroup has appointed a new head of AI, Shobhit Varshney, and reports that its generative AI tools have resulted in savings of 100,000 developer hours weekly through automated code reviews, equating to the work of 2,500 developers in a standard 40-hour work week [3].