UBS Outlook on Global Equities
UBS projects approximately a 10% upside for global stocks, measured by the MSCI All Country World Index, through mid‑2027, arguing that the recent market rally has been earned through robust profit growth rather than excessive enthusiasm. The bank’s Chief Investment Officer, Mark Haefele, highlighted that first‑quarter S&P 500 earnings growth was the strongest in four years, reflecting healthy economic activity, continued AI‑related investment, and improving earnings in more cyclical areas of the market. UBS expects second‑quarter earnings growth to be even higher.
Haefele noted that the evolution of the AI growth story will require continual reassessment, with beneficiaries likely shifting over time from semiconductors and infrastructure toward energy, applications, and firms that can translate the technology into productivity gains. He added that the next stage of the market cycle is unlikely to be defined by a single source of return, but rather by a wider group of companies and regions delivering earnings growth, pointing to recent outperformance from cyclical sectors such as financials and defensive laggards like health care relative to technology.
In its regional view, UBS upgraded European equities to “Attractive” while continuing to favor U.S. and Asian equities. The firm forecast 21% earnings growth for global equities in 2026, followed by another solid year in 2027. Overall, UBS sees around a 10% upside for global stocks through mid‑2027 and recommends that investors broaden exposure across regions to capture a wider range of opportunities and growth drivers, and to manage single‑stock risks.
The bank also flagged several risks to the rally: renewed fears of central‑bank rate hikes if energy prices rise or inflation proves sticky; AI capital expenditure or monetisation falling short of expectations; and a bumpy path toward lasting peace between the United States and Iran. Additionally, UBS noted elevated concentration risks given wide performance gaps between individual stocks.