UBS Asset Management on the 6th (local time) recommended selective investment in artificial intelligence (AI) to respond to market volatility, stating that semiconductor-related stocks are not in a bubble. The asset manager explained that the market will continue to maintain high volatility as it weighs the strong adoption of AI agents against the risk of slowing capital expenditure growth. According to OpenRouter data, weekly consumption of tokens—the basic unit of AI computing—has increased approximately eightfold this year, suggesting robust AI adoption particularly with the rise of agent-based workloads. UBS noted that recent cloud computing contracts between hyperscalers and cutting-edge AI labs were reportedly signed at prices reaching four times market rates, further indicating strong demand.
Philadelphia Semiconductor Index Forward P/E Ratio at 26x
UBS analyzed that despite strong semiconductor stock performance this year, the Philadelphia Semiconductor Index's forward price-to-earnings ratio currently stands at approximately 26 times, significantly lower than the 150 times recorded at the peak of the dot-com bubble. The institution emphasized that it maintains a positive outlook for the semiconductor industry overall, as corporate earnings have steadily increased in line with stock price gains.
Hyperscaler Operating Cash Flow Expected to Lag Capex in H2
UBS projected that as capital expenditures continue to grow, hyperscaler operating cash flow will fail to keep pace with spending demands in the second half of this year. The asset manager stated that investor pressure demanding stronger capital discipline could ultimately exert downward pressure on valuations across semiconductors and AI hardware.
Supply Bottlenecks Shift from GPU Systems to Semiconductor Equipment
UBS explained that supply bottlenecks in the AI value chain are shifting from GPU systems (2023-2025) and server components (last year) to upstream sectors such as semiconductor equipment within the next six months. The institution interpreted this situation as underscoring the importance of diversified investment and a dynamic approach. UBS noted that the investment environment is gradually transitioning from short-term growth to sustainable spending beyond next year, making diversification and selective investment critical.
UBS Favors Semiconductor Equipment and Foundries for AI Investment
The asset manager stated it prefers semiconductor equipment, foundries, CPU-related computing infrastructure, and memory as core elements of AI infrastructure buildout. UBS also forecasted investment value in defensive sectors such as payment networks and data center real estate investment trusts (REITs).
FAQ
What did UBS Asset Management recommend on the 6th regarding AI investment?
UBS Asset Management recommended selective investment in AI to respond to market volatility, stating that semiconductor-related stocks are not in a bubble while the market weighs strong agent adoption against capex slowdown risks.
Why does UBS believe semiconductor stocks are not in a bubble?
UBS analyzed that the Philadelphia Semiconductor Index's forward P/E ratio currently stands at approximately 26 times, significantly lower than the 150 times at the dot-com bubble peak, and corporate earnings have steadily increased alongside stock price gains.
Which sectors does UBS prefer for AI investment?
UBS favors semiconductor equipment, foundries, CPU-related computing infrastructure, and memory as core AI infrastructure elements, while also seeing investment value in defensive sectors like payment networks and data center REITs.
