UBS: Fed easing, profits and AI spending to keep U.S. stocks climbing
UBS says U.S. equities still have further to run, underpinned by
- the Federal Reserve’s policy easing,
- strong corporate earnings,
- and surging investment in artificial intelligence.
The bank sees the S&P 500 reaching 7,300 by June 2026, expecting the combination of looser monetary policy and robust profit momentum to sustain the rally.
Strategists at UBS argue that additional Fed rate cuts will provide a supportive backdrop as evidence mounts of a cooling labour market. While policymakers remain split over timing, the bank expects two more cuts by early 2026, saying resumed economic data after the government reopening should reinforce that inflation is easing and hiring demand weakening.
Corporate earnings strength, they add, remains a powerful anchor. Around 80 % of S&P 500 firms have reported solid third-quarter results, with the breadth and magnitude of earnings beats exceeding historical averages. Consumer spending has stayed resilient, and UBS expects activity delayed by the shutdown to rebound quickly, helping fourth-quarter growth.
UBS also highlights the structural lift from AI-related investment, noting that tech companies are reporting faster cloud growth and surging demand for compute power. NVIDIA’s call for more chip supply from TSMC underscores the sector’s momentum. The bank maintains that rising capital expenditure on AI will continue to drive market performance well into next year.
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UBS’s bullish outlook could bolster appetite for tech and cyclical stocks. Expectations of further Fed easing and strong AI-linked capex suggest continued support for growth assets into 2026.
