AI has been carrying the stock market. An industry pause could pull the rug out, warns this Wall Street giant.

Citigroup has warned investors that the stock market’s gains this year have been closely linked to progress in artificial-intelligence model development, and that a pause in that progress could undermine recent momentum. The bank flagged the possibility that slowing advances in AI models across the industry would prompt downward revisions to corporate earnings. Earnings revisions have played an outsized role in supporting equity performance in the current period, according to Citigroup’s assessment. That dynamic means that changes to analysts’ profit expectations — whether upward or downward — have carried significant weight for stock valuations. A deceleration in AI model improvements could therefore translate into fewer positive earnings surprises and more negative revisions, the bank cautioned. Because markets have leaned on those upward earnings adjustments this year, a reversal in that trend could remove a key pillar of recent gains and increase downside risk for equities. Citigroup’s warning frames the pace of AI development as a market-sensitive variable rather than a purely technology-sector issue, suggesting that broader market valuations and investor sentiment could be affected if the industry’s rate of progress eases.