Solid AI Fundamentals Should Support Stocks Further

UBS maintains an attractive rating on global equities, supported by strong AI fundamentals and resilient US economic growth. Despite market volatility and valuation concerns, the firm expects significant EPS growth and advocates for a diversified, active investment approach.

Key Takeaways

• 1.Maintain Attractive rating on global equities despite recent volatility, expecting 20% EPS growth for the S&P 500 this year.
• 2.AI spending remains robust, with hyperscalers continuing to commit massive capital to compute resources despite short-term valuation concerns.
• 3.European health care is experiencing a pullback but remains attractive due to undemanding valuations and potential for a second-half 2026 rebound.

Table of Contents

• From the studio
• Thought of the day
• AI spending is likely to stay high
• Compute demand continues to outpace existing capacity
• Growing earnings should help relieve some valuation concerns.
• Caught our attention
• Appendix