12 October 2026 | Latest available: Weekly Market Update, 29 September

Citi Wealth’s latest weekly update, Following the Earnings: Where We Are Adding Equity Risk, identifies cybersecurity as a way to gain exposure to AI adoption without needing to predict which AI model or platform will ultimately dominate. As AI agents spread across businesses, Citi argues that security spending could become an unavoidable operating cost.

Citi’s preceding 22 September report provides useful context for financing markets. It reported that the ten largest S&P 500 companies had gross margins of 58%, up from 47% in 1995, while EBITDA margins had risen from 21% to nearly 40%. It also highlighted more than $250 billion of hyper scaler debt issuance during 2026, over twice the previous year’s total. Citi’s argument is that strong profitability supports debt servicing even as rates rise.

For investment bankers, the combination of sustained AI investment and resilient earnings supports opportunities in technology, cybersecurity and infrastructure. However, Citi’s preference for higher-quality credit and shorter duration underscores the importance of borrower quality and financing terms.

Market implications

• AI: Investment opportunities are broadening beyond core computing infrastructure.

• Credit: Strong profitability supports borrowing capacity among large technology companies.

• Rates: Smaller companies remain more exposed to tighter financial conditions.

M&A / deal flow implications

• Cybersecurity acquisitions could help companies address growing enterprise AI risks.

• Large technology companies may retain the balance-sheet capacity to fund strategic transactions.

• Smaller, rate-sensitive businesses could face greater pressure to sell, raise equity or restructure debt.

3 key takeaways

1. AI-related opportunities are expanding into cybersecurity and enterprise adoption.

2. Large technology companies’ profitability supports their debt capacity.

3. Borrower quality remains important as financing conditions tighten.