Global equities

20 August 2026, 21:23 UTC Chief Investment Office GWM Investment Research

Equities CIO View: Global equities Fabian Deriaz, Investment Specialist, UBS Switzerland AG Ulrike Hoffmann-Burchardi, Chief Investment Officer Americas and Global Head of Equities, UBS Financial Services Inc. (UBS FS)

• Global equities extended their gains over the past month, supported Global Asset Class Preference Attractive by a robust earnings season, rising AI adoption, and reduced concerns of a sustained Fed hiking cycle. MSCI All Country World Index (ACWI) MSCI AC World • The macro backdrop is constructive, in our view, with supportive fiscal policies, recovering manufacturing activity, and healthy access 18 Aug 26 1,377 to capital. Structural trends should also remain a tailwind amid rising Dec 26 1,460 capex and accelerating monetization trends. Jun 27 1,510

• The combination of macro and structural tailwinds bodes well for Source: Refinitiv Datastream, UBS earnings. We lift our EPS growth targets to 26% for this year and 14% next year. While technology sectors are likely to remain leaders, we expect earnings growth and performance to broaden.

• We maintain our Attractive view and continue to recommend well- diversified exposure across regions and sectors. The timing of the reopening of the Strait of Hormuz, rising inflation and yields, and intensifying competition within technology sectors are important risks that warrant close monitoring.

Source: Anita Affentranger After a pause in June and July, global equities resumed their advance in August. The earnings season exceeded expectations in most regions, reflecting supportive structural and cyclical trends. We maintain our Attractive view on the asset class and continue to recommend broad- based, well-diversified exposure.

From a macro perspective, the outlook remains constructive. Economic growth has proven resilient despite the war in Iran. Most major economies are pursuing expansionary fiscal policies, while manufacturing PMIs across regions have returned to expansion territory after years of contraction. This reinforces our confidence in a broad-based cyclical recovery. In addition, we expect inflation to come under pressure in the coming months as tariff headwinds recede. We believe the likelihood of a sustained hiking cycle remains low and that access to capital should stay healthy.

Healthy access to capital also supports the structural side of the outlook. Investment in AI infrastructure shows no sign of slowing. The major hyperscalers once again guided for higher capital expenditure, prompting us to raise our capex growth forecasts to 84% this year and a further 33% next year. This is positive for semiconductor companies, which are benefiting directly from this spending and remain among our preferred technology segments. At the same time, the hyperscalers—the buyers of this infrastructure—are showing increasing signs of monetization, particularly in data centers. This progress has reassured investors that the

This report has been prepared by UBS Switzerland AG, UBS Financial Services Inc. (UBS FS). Please see important disclaimers and disclosures that begin on page 4.

significant investment in AI infrastructure is increasingly translating into tangible business opportunities.

Resilient macroeconomic conditions and robust structural trends continue to support earnings. The latest earnings season was very strong across regions, both in terms of reported results and forward guidance. Technology and energy stocks were major contributors, but the median company also delivered robust results. We expect earnings growth to broaden further in the coming quarters. Against this backdrop, we have raised our earnings growth estimates to 26% this year and a further 14% next year.

Interestingly, earnings growth has significantly outpaced price appreciation over the past few months, allowing valuations to normalize. The MSCI AC World’s 12-month forward P/E ratio is now almost back in line with its 10-year average and is nearly 15% below its November peak. While valuations are not outright cheap, their recent decline suggests that markets recognize how exceptional—and ultimately unsustainable over a prolonged…