UBS lifts global equities view to 'attractive' on AI boost

Global equities have climbed to record highs, driven by optimism that the U.S. Federal Reserve began cutting interest rates early enough to avoid a recession. The U.S. stock market's bull run reached its three-year mark recently, powered by AI enthusiasm and, more recently, expectations of interest rate cuts.

UBS Global Wealth Management upgraded its stance on global equities to "attractive", citing expected productivity gains from AI spending and a supportive policy backdrop. "Structural trends remain firmly in place. The wave of strategic partnerships among leading AI players reinforces our confidence in a sustained capex cycle and greater revenue visibility", UBS said in a note on Thursday. The AI boom has spurred a wave of high-profile deals involving Big Tech and Silicon Valley startups in recent weeks. Global equities have climbed to record highs, driven by optimism that the U.S. Federal Reserve began cutting interest rates early enough to avoid a recession. The MSCI World Index, which is dominated by U.S. stocks, has risen about 15.5% from its April lows, rebounding after a selloff sparked by recession fears following President Donald Trump's 'Liberation Day' tariffs. The brokerage also raised U.S. equities to "attractive" from "neutral", adding that the rally still has room to run. The U.S. stock market's bull run reached its three-year mark recently, powered by AI enthusiasm and, more recently, expectations of interest rate cuts. However, investor worries over high valuations and bubble risks have grown. Separately, UBS lifted its 2025 year-end target for the U.S. benchmark S&P 500 index to 6,900 from 6,600, aligning with a string of upward revisions from peers, citing resilient corporate earnings and a more dovish Fed.

The current target implies about a 4% upside to the index's last close of 6629.07 points.