Citi: AI boom dulls US stocks’ rate sensitivity, S&P 500 valuation above fair range

The notable claim is structural, not cyclical: Citi is arguing that AI earnings expectations have decoupled equity valuations from the Treasury-yield relationship that has anchored cross-asset thinking for years. If that holds, rate rises transmit through growth expectations rather than through the discount rate applied to stocks, which changes how macro shocks should be read across sectors. The fair-value range cited sits below the current multiple, so the model itself flags stretched sentiment even as the old valuation anchor loosens. Whether the decoupling survives a sustained rise in yields, or proves to be an AI-cycle artifact, is the open question.