Citigroup Stock Outshines Mag-7 in 2025: What Awaits in 2026?

Shares of Citigroup, Inc. C have significantly outshone the Mag-7 tech giants in 2025, with shares surging 62.9%. Investor confidence is reinforced by tangible progress in the bank’s multi-year restructuring efforts.Price Performance Image Source: Zacks Investment Research The strong rally was fueled by the Federal Reserve rate cuts, revived merger and acquisition (M&A) and initial public offering (IPO) activity, steady corporate spending, and solid consumer activity. These factors are also supporting Goldman Sachs GS and Bank of America BAC, which have also outperformed most of the Mag-7 stocks this year.After a strong 2025, the key question is whether Citigroup can sustain this momentum in 2026. Let us delve deeper and analyze how the C stock is placed for the next phase.From Complexity to Focus: Citigroup’s Strategic ResetCEO Jane Fraser continues to advance the company’s multi-year strategy to streamline operations and focus on its core businesses. Since announcing plans in April 2021 to exit consumer banking in 14 markets across Asia and EMEA, the company has completed its exit in nine countries. This month, C divested a 25% stake in Banamex to a Mexican business leader after separating its Mexican institutional banking business from consumer and middle-market units in December 2024. Last month, Citigroup also secured Kremlin approval to sell its Russia-based banking unit, AO Citibank, to Renaissance Capital. C is now preparing for a planned IPO of its Mexican consumer and small and middle-market banking units.Earlier, in May 2025, C announced an agreement to sell its consumer banking business in Poland, while in June 2024, it sold its China-based consumer wealth portfolio. Also, as part of its strategy, Citigroup continues to make progress with the wind-downs of its Korea consumer banking operations. These initiatives will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE, and London to stoke fee income growth. Similar to C, Goldman Sachs is also refocusing on its core strengths of investment banking (IB) and trading operations while scaling back its consumer banking footprint.Coming back to Citigroup, the company also announced an organizational realignment to simplify its governance structure by eliminating various management layers. Pursuant to this, the company changed its operating model and the leadership structure. This resulted in a streamlined and straightforward management structure aligned with and supporting the bank's strategy of increased spans of control and significantly reduced bureaucracy and unnecessary complexity.In January 2024, the bank announced plans to cut 20,000 jobs, approximately 8% of its global staff, by 2026. The bank has already made significant progress by reducing its headcount by more than 10,000 employees.Supported by these initiatives, Citigroup projects revenues to see a 4-5% compounded annual growth rate (CAGR) through 2026.Citigroup’s Push for EfficiencyThe company also continues to focus on streamlining processes and platforms and driving automation to reduce manual touchpoints. Citigroup is increasingly deploying artificial intelligence (AI) tools to support these efforts. In support of this strategy, Citigroup signed a multi-year agreement this week with LSEG to modernize its enterprise-wide data infrastructure. The initiative spans markets, investment banking, wealth management, trading, and risk functions, aiming to improve data quality, standardization, and accessibility across the organization. Management expects these upgrades to enable more data-driven decisions while delivering operational efficiencies at scale.CEO Jane Fraser has said Citigroup’s internal AI tools are freeing up about 100,000 developer hours per week, and that close to 180,000 employees across 83 countries have access to the bank’s internal AI capabilities. Citigroup has also referenced an annual technology budget of $12 billion, suggesting the bank has both the funding and organizational push to embed AI across functions.Given such efforts, the company expects to achieve $2-2.5 billion in annualized run rate savings by 2026.Macroenvironment & Regulatory Winds Turn Favorable for CCitigroup stands to benefit from an increasingly supportive macro and regulatory backdrop. The Federal Reserve has reduced interest rates for the third consecutive time this year, with the possibility of one additional cut in 2026. With lower rates, stocks like Citigroup and Bank of America will likely witness improvement in the net interest margin, given stabilizing funding costs and stronger loan demand.Reduced rates are likely to accelerate deal-making momentum by lowering financing costs and prompting companies to revive delayed M&A and capital-raising plans. Cheaper capital, along with resilient economic growth, typically boosts deal pipelines and IPO readiness. This improved backdrop positions Citigroup for stronger IB revenues in the upcoming period.At the same time, regulatory pressures are easing. According to a Reuters article, which was published on MSN, the Fed has closed long-standing supervisory notices related to Citigroup’s risk management and data governance shortcomings. This milestone removes a significant overhang that previously constrained strategic flexibility and followed hundreds of millions of dollars in regulatory penalties. With this burden lifted, Citigroup is better-positioned to execute its growth and efficiency initiatives.C’s Consensus Signals Accelerating Growth MomentumThe Zacks Consensus Estimate for Citigroup’s 2025 and 2026 earnings implies year-over-year rallies of 27.4% and 32%, respectively. The consensus estimate for C’s 2025 and 2026 sales implies year-over-year rallies of 6.3% and 3.4%, respectively.Sales Estimates Image Source: Zacks Investment Research Earnings Estimates Image Source: Zacks Investment Research From a valuation standpoint, C appears inexpensive relative to the industry. It is currently trading at a discount with a forward 12-month price-to-earnings (P/E) of 11.22X, well below the industry average of 14.91X. Further, Bank of America is trading at a 12-month forward P/E of 12.61X, while Goldman Sachs is trading at 15.97X.Price-to-Earnings F12M Image Source: Zacks Investment Research Final Thoughts on C StockCitigroup’s strong 2025 performance marks a meaningful inflection point following years of operational complexity and underperformance. The bank’s outperformance versus the Mag-7 reflects not only cyclical tailwinds for financials but also tangible progress in simplifying its business model, strengthening governance, and improving efficiency.Looking to 2026, Citigroup appears increasingly well-positioned to translate restructuring gains into sustainable earnings growth. Continued execution on cost reductions, disciplined capital reallocation toward higher-return businesses, and a more supportive macro and regulatory environment provide a constructive foundation. However, with expectations now higher, the stock’s ability to extend its rally will depend on consistent delivery, credit discipline, and the durability of capital market activities.Citigroup currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Naming Top 10 Stocks for 2026Want to be tipped off early to our 10 top picks for the entirety of 2026? History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2025, the Zacks Top 10 Stocks gained +2,530.8%, more than QUADRUPLING the S&P 500’s +570.3%.Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2026. Don’t miss your chance to get in on these stocks when they’re released on January 5. Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report Bank of America Corporation (BAC): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks