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Citi Wealth Sees Long Runway for AI Spending Despite Bubble Warnings

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Citi Wealth Sees Long Runway for AI Spending Despite Bubble Warnings

The artificial intelligence buildout is still in its early-to-middle stages, Citi Wealth said in a report released Wednesday (Oct. 7).

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The AI investment cycle is facing greater scrutiny due to higher interest rates, increasingly capable open-weight models, regulatory pressure and rising infrastructure costs, the bank said in the report.

At the same time, despite the “growing noise” around the AI buildout, other signals remain strong, including semiconductor demand that continues to outpace near-term supply, U.S. core capital goods orders that rose in the first half, and AI-related exports that continue to drive growth in countries like South Korea and Taiwan, per the report.

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“We continue to favor diversified semiconductor exposure as a core holding and a key pillar of our U.S. large cap overweight,” Citi Wealth said in the report. “We also favor hyperscalers, which enter the next phase from a position of strength. Their vertical integration across large language models (LLMs), compute infrastructure (data centers) and chips strengthen their competitive advantage.”

On the same day this publication arrived, Reuters reported that analysts are watching Samsung Electronics’ upcoming earnings as they look for data on whether memory chip margins have peaked and whether the AI spending boom remains durable.

Samsung is set to release its preliminary third quarter results Thursday (Oct.


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