Moody’s downgrades Senegal to Caa1 amid rising debt concerns
Investing.com -- UBS told investors in a note Friday that the artificial intelligence rally “remains underpinned by solid fundamentals, accelerating adoption, and a still-favorable macro environment,” even as concerns grow over a potential bubble in AI-related stocks.
The bank said recent developments have “brought more reasons for optimism.” UBS analysts cited Dell doubling its AI growth estimates, AMD’s multi-year chip deal with OpenAI, and OpenAI’s new partnerships with Samsung, NVIDIA, Oracle, and Broadcom.
The deals “point to hundreds of billions in investment commitments, reinforcing the sector’s rapid capital deployment and pace of innovation,” according to UBS analysts.
While acknowledging that volatility could pick up and investors should remain “alert to signs of froth,” UBS argued there are compelling reasons for investors to stay engaged with the AI theme.
The firm pointed to continuing product innovation driving compute demand and said new infrastructure projects imply “up to 16 gigawatts of new infrastructure planned.”
UBS believes AI adoption is growing rapidly, with 26% of Americans now said to be using AI tools daily, compared with 59% in early-adopter markets such as the UAE and Singapore.
“We anticipate global AI revenues will grow at a 41% compound annual growth rate through 2030, reaching USD 2.6 trillion,” the analysts wrote.
The bank said valuations “are not yet at dotcom bubble extremes,” stressing that “today’s tech giants have higher-quality earnings, cash flows, and balance sheets.”
UBS expects global AI capital expenditure to rise 67% this year to $375 billion and another 33% next year to $500 billion, recommending “balanced exposure to AI-aligned companies across software, hardware, and semiconductors.”