Latest update
Key message
Tech stocks has come under renewed pressure as US expands its chip export curbs while tariff uncertainty remains elevated. But while volatility is likely to remain in the near term, we think solid fundamentals of the AI growth story will drive the sector’s long-term outperformance. Structured strategies including capital preservation strategies should be considered in building up long-term exposure, in our view.
While we see further risks over the near to intermediate term, we still view the US technology sector and the AI TRIO (Transformational Innovation Opportunities) as Attractive.
New this week
Taiwan Semiconductor Manufacturing Co.(TSMC), the world’s largest contract chip manufacturer, offered some reassurance of the underlying AI demand by maintaining its revenue growth outlook and capital spending projection for 2025. It also kept its forecast that AI-related sales will double this year, and guided for a better-than-expected 2Q net revenue.
Investment view
While uncertainty remains elevated, quality tech stocks should see a strong price-to-earnings multiple rerating once fundamentals are back in focus. Investors can consider structured strategies to build long-term exposure.
Did you know?
- During the first trade war in 2018, heightened tech volatility was followed by a 35% rebound in the next 12 months as investors focused on quality tech companies’ solid fundamentals and strong free cash flow generation.
- Potentially lower training and inference costs could accelerate AI adoption in a growing addressable market, boosting AI monetization in the medium to longer term.
- The artificial intelligence market potential is large—we estimate that AI value creation could amount to USD 1.16 trillion by 2027.
Feature reports
1. AI will be the most profound innovation and one of the largest investment opportunities in human history
2. The ratio of monetization potential of the AI application layer to the costs of the enabling and intelligence layers will become a key metric for investment returns
3. AI will kick off a data center capex cycle that will dwarf general purpose data center capex in the next years
4. The AI silicon moment: AI chips will capture a large part of the AI value creation
5. The AI enablers will be the first adopters of AI, driving both revenue and margin upside
6. Monolithic players will emerge along the AI value chain and over time, the AI market will be dominated by an oligopoly of vertically integrated “AI foundries”
7. Software will become ubiquitous
8. Data assets will emerge as the competitive differentiators for AI adopters
9. Despite the increasing number of new open-source models, proprietary models will remain the top performers
10. The application and intelligence layers will merge with artificial general intelligence (AGI)
Want to learn more?
Artificial Intelligence (AI):
Sizing and seizing the investment opportunity
Video updates
Related podcasts
9 May 2025
Artificial Intelligence 101
Artificial Intelligence 101
Zhang Zhang is the Head of AI and Risk Analytics at Polen Capital. Listen to a wide-ranging conversation about the evolution of AI, where AI is being under and over-hyped, words of caution to be mindful of, along with common current and anticipated future use cases of this rapidly evolving technology. Host: Daniel Cassidy
16 Apr 2025
UBS AI Podcast: CEO series
UBS AI Podcast: CEO series
The UBS AI Podcast explores the fascinating and evolving world of artificial intelligence, how it's transforming industries, redefining what's possible and reshaping the future. On this first episode of the CEO Series, Ulrike Hoffmann-Burchardi, CIO for Global Equities with the UBS Chief Investment Office, converses with Arvind Jain, the CEO and Co-Founder of Glean. Ulrike and Arvind dive into the vision behind Glean, and discuss the future of AI and workplace productivity.
Get in touch
