Citi Strategist's Bullish Stance on Software/Semiconductor Stocks Amid January 5 Tech Sell-Off

On January 5, 2026, Citi U.S. equity strategist Drew Pettit expressed confidence in software and semiconductor stocks during CNBC’s “Closing Bell Overtime” segment, stating, “We’re not afraid of software, semiconductor stocks” [1]. The discussion followed a day where the U.S. Technology sector closed down 0.31%, underperforming the broader S&P 500 (+0.14%) and Dow Jones (+1.09%) indices [0]. Semiconductor stocks NVIDIA (NVDA) and AMD saw more significant declines (-1.90% and -3.98%, respectively), while software giant Microsoft (MSFT) showed relative resilience (-0.26%) [0].

Pettit’s bullish stance aligns with strong underlying sector fundamentals: NVDA boasts a trailing 12-month net profit margin of 53.01% and a market cap of $4.58T, with analysts issuing a consensus BUY rating and target price of $257.50 (36.9% upside) [0]. Similarly, MSFT has a 35.71% net profit margin, $3.51T market cap, and consensus target price of $640.00 (35.3% upside) [0]. The technology sector also benefits from long-term growth drivers, including AI infrastructure and enterprise software demand [1].

1. Sentiment Counteraction
   : Pettit’s comments from a major bank strategist may help counteract the day’s mild tech sell-off, which likely stemmed from short-term profit-taking after earlier gains [1].
2. Catalyst Alignment
   : The bullish stance precedes upcoming events like NVIDIA’s CES 2026 announcements and earnings reports (NVDA: February 25, 2026; MSFT: February 4, 2026), which could serve as positive catalysts [0].
3. Segment Differentiation
   : The January 5 performance showed software stocks are more resilient than semiconductors, suggesting varying levels of investor sensitivity across tech subsectors [0].

• Opportunities
  : Pettit’s comments may boost short-term investor sentiment, especially for stocks with strong fundamentals like NVDA and MSFT [1]. Upcoming CES announcements could drive semiconductor sector momentum [0].
• Risks
  : Tech sector volatility remains a concern, with historical short-term price swings [0]. High analyst earnings expectations could lead to disappointment if results fall short. Increased competition in AI chips and software may also pressure margins [2].

This analysis synthesizes Pettit’s bullish comments, January 5 sector performance, and underlying stock fundamentals to provide context for decision-making. Decision-makers should monitor upcoming catalysts (CES announcements, earnings reports) and sector volatility. The information gaps, including the full CNBC segment transcript, highlight the need for further context on Pettit’s exact reasoning and additional data on other major tech stocks.