From Financial Modeling Prep: 2025-02-21 08:57:11

UBS analysts predict mid-teen returns in the global AI sector by 2025, naming AI as the defining tech theme of the decade. Despite strong past performance, they believe AI stocks still have room to grow, driven by accelerating adoption and increased investment commitments.

Since the launch of ChatGPT in late 2022, the NASDAQ 100 has surged over 84%, reaching all-time highs. UBS attributes this growth to the coexistence of low-cost and high-cost AI models, expanding AI integration across industries and applications.

UBS forecasts global AI spending to hit nearly $500 billion by 2026, with revenues matching that figure. They estimate a $1 trillion profit opportunity from the demand for AI-driven solutions, projecting global AI operating profits to reach $350 billion by 2025.

China’s AI sector has rebounded 25% in the past month, driven by excitement around DeepSeek’s AI model. UBS expects the sector to maintain low-teens annual returns, with AI spending projected to reach $30 billion and revenues hitting $50 billion by 2028.

UBS recommends investors to “buy the dip” in quality AI stocks, favoring large-cap leaders like NVIDIA and Microsoft, cloud platforms such as AWS and Google Cloud, and semiconductor firms like TSMC and AMD. Companies benefiting from AI-driven automation and data analytics are likely to see continued growth.

UBS remains optimistic about AI’s long-term growth, with AI-related revenues expected to surpass $500 billion by 2026. The sector’s expansion presents significant opportunities for investors focusing on high-quality AI stocks, driven by continued investment momentum and evolving AI applications.



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