Transformational Innovation Opportunities (TRIO)

24 July 2026, 13:23 UTC Chief Investment Office GWM Investment Research

Intelligence weekly #121: Deeper dive into semicap opportunities Transformational Innovation Opportunities (TRIO): Artificial Intelligence Authors: Delwin Kurnia Limas, CFA, CIO Equity Strategist, UBS AG Singapore Branch; Allen Pu, CFA, CIO Equity Strategist, UBS AG Hong Kong Branch; Kevin Dennean, CFA, CIO Equity Strategist, US Technology & Telecom, UBS Financial Services Inc. (UBS FS); Achille Monnet, CIO Equity Analyst, UBS Switzerland AG; Arafat Alafate, CIO Equity Strategist, UBS AG Hong Kong Branch; Nikolaos Fostieris, Global Equity Strategist, UBS Switzerland AG; Xueqiong Huang, Equity Strategist, UBS AG Singapore Branch

• At the start of the 2Q26 technology earnings season, we have already seen upward revisions to capex targets from Alphabet, TSMC, and ASML, underscoring continued robust demand for AI computing power and semiconductors. This signals to us that industry investment and capacity expansion are likely to persist longer than previously expected.

• These developments reinforce our preference for the semiconductor equipment (semicap) sector within the broader semiconductor supply chain and AI compute landscape. Semicap stands out as the top segment in our AI compute pecking order, given its critical role and greater earnings visibility. Source: Shutterstock • Given the sector's complexity and importance, we take a deeper dive into semicap to identify investment opportunities. We introduce key areas of opportunity and highlight companies we favor, providing further insight into the drivers behind our positive outlook.

Our view Global investors are entering a period of intensive 2Q26 These moves highlight the higher certainty of growth in earnings releases since last week, especially focusing on semiconductor spending, supporting our positive outlook the outlooks given by major tech companies. Information for the semiconductor equipment (semicap) sector and from several firms that have already reported confirms explaining why this segment ranks first in our AI compute that the global trend of expanding investment in AI pecking order. Given the relatively long and complex computing power remains strong. Alphabet has once semiconductor manufacturing process, which involves again raised its 2026 capital expenditure target, from USD numerous types of equipment, we would like to further 180-190bn to USD 195-205bn, reflecting sustained high highlight the sector and share the sources of opportunity demand for semiconductors. As a result, the expansion we favor, along with our reasons for highlighting certain of semiconductor capacity is expected to last longer than companies. originally anticipated. TSMC has increased its full-year capex target for the second consecutive quarter, now aiming for USD 60-64bn—25% higher than at the start of the year. Equipment supplier ASML has also raised its annual revenue target from EUR 36-40bn to EUR 43-45bn, also marking two consecutive quarters of upward revisions.

This report has been prepared by UBS AG Singapore Branch, UBS AG Hong Kong Branch, UBS Financial Services Inc. (UBS FS), UBS Switzerland AG. Please see important disclaimers and disclosures at the end of the document.

Transformational Innovation Opportunities (TRIO): Artificial Intelligence

AI selection list wafer. CMP also plays a vital role in removing excess metals, such as copper, left behind after filling microscopic wiring trenches. By clearing away these materials, CMP prevents defects and ensures each layer is ready for subsequent steps. Overall, CMP is indispensable for achieving the high degree of accuracy and reliability required in modern chip fabrication.

The next step in the core process is deposition, which adds microscopic layers of semiconducting materials across the wafer. The primary tools used in this step are chemical vapor deposition (CVD) reactors and physical *Potential trading restrictions. This is a copy of the Equity Preference List vapor deposition (PVD) chambers. Deposition equipment (EPL) "AI." As selections may change, we recommend visiting the UBS WM enables chemical reactions that form solid, uniform thin CIO portal…