Barclays strategists maintain a preference for US growth stocks and large-cap stocks, citing that artificial intelligence (AI) spending will continue to underpin corporate earnings.

A team led by Venu Krishna noted that the US economy remains in positive growth territory, and despite market volatility, AI-driven investments are supporting profitability. Given softening inflation expectations and slowing economic growth, they maintain a neutral stance on cheaper value stocks.

They continue to favor large-cap stocks due to their superior earnings performance, while smaller companies face headwinds from rising debt levels and tightening financing conditions. With investors having already significantly reduced their substantial positions in the AI sector, the upside potential for defensive strategies has diminished.