Despite a recent pullback in tech shares and growing investor caution, UBS remains upbeat about the prospects for artificial intelligence, arguing that ongoing AI-driven innovation should continue to propel global equity markets over the coming months.
The bank’s optimism is rooted in strong investment-spending forecasts. UBS projects that global AI expenditure will reach €571 billion in 2026—a 35% jump from its 2025 estimate of €423 billion. Looking further ahead, the firm expects annual spending to climb to €1.3 trillion by 2030, implying a compound annual growth rate of around 25%.
UBS also suggests these figures could ultimately prove conservative. The broker points out that capital-expenditure forecasts have been surpassed in recent years and that demand for compute capacity may accelerate as AI workloads become more complex.
The solid financial footing of the world’s largest tech companies is another key factor supporting the outlook. Even with elevated capex, many industry leaders are generating strong operating cash flows that comfortably cover investment needs. UBS views the recent series of bond offerings from these companies as a strategic choice rather than a sign of financial strain, noting that today’s financing mix appears healthy.
Addressing concerns about circular financing, UBS draws clear distinctions between today’s environment and the excesses of the dot-com era. This analysis comes amid heightened scrutiny of major AI-related deals, including NVIDIA’s (NASDAQ:NVDA) partnership with Microsoft (NASDAQ:MSFT) involving up to €15 billion of combined investment in Anthropic. UBS estimates that the commitments from NVIDIA’s latest partnerships amount to only about 10% of its projected 2026 pre-tax profits—far below the more than 120% levels seen in the late 1990s.
UBS also notes that modern transactions benefit from stronger disclosure rules, improved accounting practices, and a significantly reduced scale of supplier financing.
On the monetization side, UBS highlights that the gap between AI spending and revenue generation is narrowing. Leading cloud providers continue to report faster revenue growth, while executives have been emphasising the expanding monetization runway offered by new AI tools. Companies are also seeing concrete productivity improvements, including measurable value creation and notable daily time savings for employees.
Overall, UBS maintains that AI’s monetization potential remains substantial—even when set against the sizeable capex plans now underway.
The report comes at a time of increased market jitters. The S&P 500 fell for a fourth consecutive session on 11/19, marking its longest losing streak in three months, and global markets were similarly cautious heading into NVIDIA’s earnings release, with major Asian indices finishing slightly lower.