UBS bullish on big tech+ for 2025

UBS BULLISH ON BIG TECH+ FOR 2025

UBS Global Research expects continued Tech+ (Technology, parts of Communication Services and AMZN) growth in 2025 but sees defensive stocks being less attractive given robust economic trends.

UBS sees continued earnings strength from the Tech+ group, noting that they are delivering "substantially stronger revisions" compared to other S&P 500 groups.

"We were previously Neutral on the largest 6 TECH+ stocks as a group, but Overweight the rest of TECH+," UBS says.

"Looking ahead, we expect their performance to be more aligned with each other, but stronger than the broad market."

AI fever, coupled with a resilient economy and stronger earnings, has lifted the S&P 500 index SPX to fresh records this year.

The brokerage, although broadly negative on defensives, also upgraded the Utilities sector, as it has seen unusually strong growth from the additional demand for power for Artificial Intelligence (AI) and electric vehicles.

The AI boom, which has powered chipmakers such as Nvidia NVDA, and other big tech firms, has turbocharged global demand for infrastructure such as data centers and high-powered servers.

UBS economists were cautious on consumer spending patterns and hence downgraded the discretionary sector to Neutral.

(Joel Jose)

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