Market not pricing in the magnitude and duration of AI buildout remaining: Citi's Scott Chronert

• Bond yields and Brent crude prices are quietly creeping higher, with Brent at a new four-year high, but Q1 earnings may not yet reflect the full burden of higher oil prices.
• Market valuations imply an extremely high 5-year earnings growth CAGR of about 12%, placing a high 'burden of proof' on fundamentals to deliver.
• The semiconductor sector has become 'very attractive' due to stronger earnings growth and corrected forward P/E ratios, making the AI buildout a high-conviction play.
• The market has not yet fully priced in the magnitude and duration of the AI buildout, particularly concerning hardware and hyperscaler CapEx projections.

Scott Chronert, Citi's U.S. Equity Strategist, discusses market valuations, bond yields, and oil prices, noting that while valuations are high, the market isn't overly sanguine. He highlights the 'picks and shovels' play in semiconductors related to the AI buildout as a high-conviction area, suggesting that the market hasn't fully priced in the long-term magnitude and duration of AI growth.