Monitoring AI Risks Amid Volatility

Global equity markets are experiencing volatility as investors weigh the sustainability of heavy AI capital expenditures against strong demand fundamentals. UBS maintains a long-term positive outlook on AI but advises diversifying into defensive sectors and other structural trends.

Key Takeaways

• 1.Global equities faced volatility due to concerns regarding the sustainability of AI capex growth.
• 2.Despite recent volatility and increased hyperscaler capex risks, the medium-term demand story for AI remains intact.
• 3.Heatwaves in Europe have strained power grids and infrastructure, reinforcing the long-term case for investment in climate adaptation and electrification.

Table of Contents

• From the studio
• Thought of the day
• What to watch: 30 June
• Caught our attention
• Market update
• Appendix

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