Barclays maintains a positive outlook on the U.S. growth sector, expecting a slow recovery for the European momentum market.

Barclays strategists maintain their preference for positioning in U.S. growth stocks and large-cap stocks, as spending in the artificial intelligence sector supports corporate profits. In Europe, institutions continue to favor value stocks and indicate that after significant sell-offs, momentum trading may gradually recover. A research team led by Venu Krishnan states that the performance of the U.S. growth sector remains positive, despite increased market volatility, as investments related to artificial intelligence bolster profits; amid weakening inflation expectations and slowing economic growth, institutions maintain a neutral stance on low-priced stocks. Institutions still favor large-cap stocks, as these firms exhibit stronger earnings, while small-cap companies face challenges due to high debt and a tightening financing environment. The upside for defensive strategies is limited, and investors have significantly reduced their positions in heavily weighted artificial intelligence-related holdings. The European momentum sector has experienced substantial sell-offs, leading to a thorough clearing of crowded positions, which may slowly repair in the future; Barclays remains optimistic about value stocks in the European market.