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Investing.com -- Despite recent weakness in technology stocks and growing investor caution, UBS maintains a bullish outlook on artificial intelligence investments, projecting that AI-driven innovation will continue propelling global stock markets higher in the months ahead.
The brokerage’s confidence stems from robust capital expenditure projections. UBS expects global AI capex to reach $571 billion in 2026, representing a 35% increase from its estimate of $423 billion for 2025.
By 2030, UBS anticipates annual spending will hit $1.3 trillion, implying a compound annual growth rate of 25%.
The brokerage acknowledges these projections could ultimately prove conservative, noting that capex estimates have been exceeded over the past few years, and demand for compute could accelerate further as AI tasks become more complex.
The financial health of leading technology companies underpins this outlook. Despite growing capital expenditure, most big tech companies today generate substantial operating cash flows that more than cover these investments.
UBS views the recent wave of bond issuance by these companies as more of a financing choice than a need, and considers the current mix of funding approaches as still healthy.
Addressing concerns about circular financing arrangements, UBS drew distinctions between current practices and those during the dotcom era.
The brokerage’s analysis came amid heightened concerns over deals such as NVIDIA’s partnership with Microsoft to invest up to a combined $15 billion in AI developer Anthropic.
Following this latest deal, UBS estimates NVIDIA’s recent collaborations account for only 10% of its projected pretax earnings for 2026, well below the over 120% levels observed during the late 1990s.
UBS notes that today’s deals are subject to stringent disclosure requirements and enhanced accounting standards, and that the scale of vendor financing has declined significantly.
On monetization, UBS sees a narrowing gap between AI spending and revenue generation.
Leading cloud platforms have reported accelerating revenue growth, and management teams have highlighted growing monetization potential with innovative AI tools.
AI is also driving productivity gains, with companies reporting tangible value creation and daily time savings for employees.
UBS continues to believe that the monetization potential for AI is large, even compared to the substantial capex plans.
UBS’ outlook comes as markets showed signs of nervousness, with the S&P 500 falling for a fourth day on November 18, its longest losing streak in three months.
Global stock markets traded edgily on November 19, with major Asian indexes closing modestly lower, as investors remained cautious ahead of NVIDIA’s earnings results.