UBS predicts AI-related capital expenditure will near USD 1tn next year, driving gains in cyclical sectors and AI-linked equities.
UBS projects AI-related capital expenditure will approach USD 1 trillion in 2025, citing persistent capacity constraints in the AI supply chain as a catalyst for further equity gains. The bank highlights strong performance in AI-linked stocks, with the Philadelphia Semiconductor Index surging 87.8% in Q2, its best quarter on record.
Global equities rallied 14.5% in the second quarter, marking their strongest performance in six years. UBS attributes the broadening rally to easing energy costs and improved supply visibility as Strait of Hormuz traffic resumes, benefiting cyclical sectors.
The bank does not anticipate Federal Reserve rate hikes this year, interpreting recent policy signals as indicative of a slower near-term response. UBS maintains a positive six-month outlook for equities despite geopolitical tensions affecting early July sentiment.