Solid AI Fundamentals Should Support Stocks Further

UBS maintains a positive outlook on global equities driven by robust AI fundamentals and resilient US economic growth. Despite valuation pressures in the tech sector, long-term AI demand remains high.

Key Takeaways

• 1.We maintain an Attractive rating on global equities, anticipating 20% EPS growth for the S&P 500 this year.
• 2.AI spending and demand remain robust, supported by high hyperscaler capex despite concerns over valuations.
• 3.We retain conviction in the European health care sector, seeing the recent pullback as a rotation opportunity rather than a fundamental shift.

Table of Contents

• From Circle One
• Thought of the day
• What to watch: 5 June
• Compute demand continues to outpace existing capacity
• Growing earnings should help relieve some valuation concerns
• Caught our attention
• Market update
• Global asset class preferences definitions
• Appendix