UBS 2026 Investment Strategy: Focus on AI applications, technology stocks need to be selected, and go beyond electrification themes

The Zhitong Finance App learned that in the newly released “2026 Global Stock Strategy Outlook” report, UBS systematically explained its views, themes, and industry allocation suggestions for the global stock market in the coming year, and listed seven major themes. The report emphasizes that in the context of moderate macroeconomic growth, ongoing inflationary pressure, and intertwined geopolitics and technological changes, investors should adopt a selective overmatch growth theme, while focusing on a balanced strategy of valuation protection and risk defense.

Topic 1: Technology Stocks +, Selective Overallocation. Given that the capital intensity of hyperscale data center operators has almost tripled in the past four years, UBS is more cautious in investing in technology stocks +, focusing on Microsoft (MSFT.US), Amazon (AMZN.US), TSM.US, and Tencent (00700), as well as strategically focusing on SAP (SAP.US). UBS is wary of Apple (AAPL.US), Tesla (TSLA.US), and companies based on advertising business models.

Topic 2: Winners in the AI Era. UBS emphasized pure data center concept stocks with reasonable valuations. UBS believes 2026 will pay more attention to application scenarios (this will benefit food retail, hotel conference companies, low-cost airlines, financial institutions, etc.). UBS focuses on labor-intensive companies with pricing power, highlighting the following companies: Assa Abloy, Kone, Texas Highway Bar (TXRH.US), Next, Eaton, McDonald's (MCD.US), and BAE Systems (BAESY.US).

Topic 3: Electrification. UBS still believes that it is still in the early stages of development. Only 20% of global energy consumption comes from electricity; by 2050, this share will need to reach 55% to 70%. Europe's electricity consumption is 4% below pre-COVID-19 levels. UBS focuses on European power transmission and distribution companies (Elia, Redeia), renewable energy companies (FSLR.US), RWE, Solaria), American independent power generation companies (Vistra (VST.US)), and some equipment companies (Schneider, Prysmian, Eaton).

Topic 4: EU consumers may be pleasantly surprised in 2026. UBS focuses on banking, retail, consumer-focused hotels, and budget airlines: Ryanair, Accor and Inditex Group are expected to perform well.

Topic 5: For the third year in a row, UBS is optimistic about European and Japanese bank stocks, as UBS still sees strong macroeconomic and valuation support. Bank stocks should be re-valued to reflect their fundamentals and potential returns that are superior to historical averages in almost every indicator. Europe is concerned about Barclays, Santander, Erste, Bank of Greece, and Societe Generale; in Japan, UBS believes that the risk is that interest rates will rise more than expected, so the Bank of Japan also has the ability to hedge against arbitrage transactions.

Topic 6: Choosing Defensive Stocks Although UBS saw a positive surprise in global GDP, it believes that judging from various indicators, the valuation of cyclical stocks is already too high (valuation, degree of congestion, relationship with profit momentum, and internal correlation of the index). As a result, UBS recommended buying defensive stocks that are cheap and have exaggerated disruptive risks: household goods (CL.US) and Regal), US medical devices (ABT.US) and Alcon), condiment companies (Novonesis), and UK food retail (Tesco).

Topic 7: Gold concept stocks as a hedge against currency depreciation/sovereign credit rating downgrades: Prefer gold mining equipment companies (such as Metso) over gold stocks themselves.

Stylistically, UBS continues to overmatch factors of low PEG (most important), low leverage, and upward profit correction. The quality factor continues to be exceeded, but the focus is on individual stocks with reasonable valuations and positive profit revisions. In Europe and the UK, small-cap stocks are slightly overvalued compared to large-cap stocks due to their low valuation. UBS uses high-quality stocks as a benchmark (focusing on stocks with lower prices and rising profit expectations).

Major holdings reduction sectors: metals and mining (excluding copper and aluminum), energy, bulk chemicals, US low- and middle-end consumer goods, some Mag 7 stocks (the correlation between which has fallen to a new low), capital goods, asset management companies, food producers, broadcasters, creative agencies, recruitment agencies, and office real estate.