Catenaa, Sunday, October 11, 2026- Big tech firms on Wall Street have turned to roughly $300 billion in off-balance-sheet residual guarantees and special vehicles.
According to Citi Wealth, the off-balance-sheet Residual Value Guarantees (RVGs) and Special Purpose Vehicles (SPVs) of big tech warrant scrutiny, but do not necessarily signal late-cycle distress.
In its Macro Investment View for Q4, Citi Wealth said that as this cycle matures, borrowers naturally seek to lower their cost of capital and amplify return potential.
“Despite growing noise around the AI buildout, the signals we track keep us constructive on this multiyear cycle, which we believe remains in its early-to-middle stages,” the investment firm said.
Moreover, Citi Wealth said that tech companies alone now represent roughly 40% of the S&P 500’s market value, twice their share in 2022, and drive 53% of expected 2026 earnings growth.
Many of these AI-related companies have also issued more than $200 billion in combined investment-grade debt to finance the next phase of AI investment, the outlook report said.
Citi Wealth also said that chip demand continues to outpace near-term supply, as US core capital goods orders rose in the first half of 2026, and AI-related exports also continue to lift growth in countries like South Korea and Taiwan.
It said earnings delivery and the ecosystem’s ability to convert AI adoption into sustainable cash flow increasingly decide whether the next dollar should be invested in AI.
“Overall, our overweight to US large cap equities provides exposure to what we view as a strong combination of macro and fundamental support,” Citi Wealth said, adding that semiconductors and hyperscalers make up 39% of the S&P 500, making them essential components for any US equity allocation.
According to Citi Wealth, hyperscalers are a key driver of US equity performance and offer resilient exposure within the AI ecosystem.
Citi Wealth said hyperscalers could benefit from their established cloud operations, customer networks, and expanding semiconductor capabilities, which provide several potential sources of revenue and cost efficiencies.
Citi Wealth also added that strong balance sheets provide flexibility as they incorporate more debt into their financing mix; yet, scale alone cannot guarantee returns, as AI revenue and productivity gains must ultimately justify rising capital investment.
“Because hyperscalers focus on owning the compute infrastructure rather than frontier models, we believe they are well positioned to capture incoming revenue as agentic AI takes off,” Citi Wealth said.
It also said that even if public opposition slows data center development, hyperscalers are still likely to benefit from owning existing data centers.
