UBS Raises 2026 Global Earnings Forecast to 20% as Markets Defy Geopolitical Pressure
UBS Raises 2026 Global Earnings Forecast to 20% as Markets Defy Geopolitical Pressure
UBS has lifted its 2026 global equities earnings growth forecast to 20%, up from 12%, after stronger-than-expected corporate results, resilient consumer demand, and continued enthusiasm around artificial intelligence helped global markets reach fresh highs.
The Swiss bank’s chief investment office said the outlook for global stocks remains “attractive,” even as investors continue to monitor risks linked to the US-Iran conflict and energy market disruption. UBS also raised its target for the MSCI All Country World Index, forecasting 1,410 by December 2026 and 1,470 by June 2027, compared with around 1,310 currently, according to Proactive Investors.
Technology and AI Drive the Upgrade
UBS said about half of the earnings upgrade comes from the technology sector. Demand for computing power, memory chips, cloud services, and digital advertising remains strong. The bank expects AI-related capital spending to rise by nearly 70% this year, followed by another 20% next year.
This shows that artificial intelligence is still one of the biggest forces shaping global markets. However, UBS is becoming more selective, looking beyond large US technology companies and identifying opportunities in areas such as Chinese technology stocks.
Energy Sector Benefits from Oil and Gas Disruption
Around one-quarter of the earnings upgrade is linked to the energy sector. Oil and gas prices have been supported by concerns over disruption in the Strait of Hormuz, a key route for global energy shipments.
Higher energy prices can support profits for oil and gas companies, but they can also create inflation pressure for consumers and businesses. UBS warned that if energy disruption lasts longer than expected, it could become a major risk for markets.
Global Markets Remain Strong Despite Risks
Although global equities fell in March after the Iran conflict began, markets rebounded strongly in April and continued climbing through May. UBS said strong earnings, healthy consumer spending, and solid business performance helped investors look past some geopolitical uncertainty.
The bank still warned that markets may pause or consolidate in the near term, especially after such a strong rally. Even so, UBS believes the broader investment backdrop remains supportive.
Preferred Markets and Sectors
UBS recommends diversified exposure across regions and industries. Its preferred markets include the United States, Japan, emerging markets, and Switzerland.
Outside artificial intelligence, UBS sees opportunities in consumer discretionary, industrials, healthcare, US financials, US utilities, and European real estate. The bank said investors should avoid relying too heavily on one narrow group of technology stocks.
Key Risks Investors Should Watch
UBS highlighted three main risks: a delayed reopening of the Strait of Hormuz, rising inflation and bond yields, and stronger competition in technology markets.
The bank also warned that the market recovery has been narrow, especially in technology-heavy markets. This has increased concentration risk, meaning a small number of large companies are carrying much of the market’s gains.
In a downside scenario, UBS said the MSCI ACWI could fall to 935 by December if the Middle East conflict worsens, energy disruption continues for months, or inflation forces markets to price in interest rate hikes.
Market Outlook
Overall, UBS remains optimistic but cautious. The bank’s upgraded earnings forecast suggests confidence in corporate profitability, especially in technology and energy. Still, it recommends diversification because geopolitical risks, inflation, and market concentration could quickly change investor sentiment.
This article is for informational purposes only and does not constitute financial advice.
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