Europe is increasingly emerging as a HEDGE against AI exposure: The Stoxx Europe 600 index finished flat or higher in 5 of the 9 weeks this year when the S&P 500 fell at least -1.5%, its strongest relative performance to the US since at least the Great Financial Crisis. $FEZ $SPY By comparison, during the 2022 bear market, European stocks saw 4 such weeks. Against this backdrop, Citi downgraded US equities and global Technology to neutral, while upgrading European equities, excluding the UK, to overweight. This comes as Europe's lower AI exposure seems to be a key advantage, with AI infrastructure accounting for just ~15% of the Stoxx 600, compared with 40% of the S&P 500. Overall, AI-related stocks account for less than 25% of Europe's projected 9% earnings growth in 2027, versus more than ~66% of expected S&P 500 earnings growth. Europe is becoming a defensive alternative to AI-heavy US stocks: