UBS Shifts Focus to AI and Semiconductors in Equity Strategy

UBS has updated its "Global Equity Focus List," reducing allocations in major Big Tech stocks like Apple, Alphabet, Amazon, Meta, and Oracle, each by 0.5 percentage points. Simultaneously, the investment bank increased weightings for NVIDIA (+1 ppt), Broadcom, and Micron (+0.5 ppt each), while adding NXP Semiconductors (+0.5 ppt).

Despite recent AI-related stock gains, UBS remains bullish on artificial intelligence, describing it as the "most profound innovation in human history." The bank highlights AI's early-stage growth, presenting opportunities across enabling technologies, intelligence, and applications. Analysts foresee strong drivers over the next 12-18 months, including rising capital expenditures and improved monetization.

UBS prefers AI infrastructure firms with pricing power and competitive positioning, along with platform and application players poised to benefit from AI advancements. Notably, the launch of ChatGPT is likened to transformative events such as the debut of the Netscape browser and Windows OS.

Looking ahead, UBS predicts AI-related revenues could surpass the trillion-dollar mark annually within the next decade. The report also emphasizes AI's potential to drive significant productivity gains, boosting real GDP per worker through generative AI adoption.

This strategic pivot underscores UBS's commitment to capitalizing on AI's transformative impact, prioritizing companies that stand to benefit from the evolving technology landscape.