UBS advised investors to capitalize on market volatility and invest in high-quality AI stocks, citing strong demand and capital expenditures in the sector. The brokerage maintains a bullish outlook on AI and recommends focusing on semiconductors and software as key segments, followed by memory makers, which show signs of a cycle bottom. Semiconductor equipment manufacturers rank lower due to their exposure to geopolitical tech restrictions.
UBS highlighted continued robust spending on advanced AI chips, with the combined capital expenditures of major players expected to grow 51% year-over-year to $224 billion in 2024 and 25% to $280 billion in 2025. For venture capital investors, UBS sees opportunities in early-stage AI, including natural language interfaces, AI agents, and platforms for data training and media content creation. However, the firm warned that such investments come with high risks and longer time horizons. The brokerage also noted the potential for AI adoption in industries like automotive and robotics, which could further boost spending as more companies build AI capabilities