UBS maintains a bullish view on the S&P 500: optimistic about profit prospects, expects AI capital expenditure to surge by 68% this year.

UBS Global Wealth Management department maintains its target price of 7900 points for the S&P 500 index at the end of the year. The new core content added this time is the Swiss bank's explanation of the core driving force that will propel the market into the next round of upside trends. The bank believes that what will support the strong finish of the U.S. stock market this year will be strong cash flow, profit growth, and the operational capabilities of companies themselves, rather than the general popularity of artificial intelligence topics. UBS' bullish forecast for the S&P 500 index primarily relies on significantly raising the index's overall profit expectations. The bank has raised its 2026 earnings per share forecast for the index from $310 to $335, corresponding to an annual profit growth rate increase from the previously forecasted 11% to nearly 20%. Additionally, UBS expects global AI-related capital expenditures to surge by 68% in 2026, reaching a total of around $820 billion; in 2027, this expenditure is expected to continue to increase by 21%, approaching a scale of nearly $1 trillion. With current semiconductor supply shortages, rising chip rental prices, and ongoing corporate financing and fundraising, it is virtually impossible for the industry to reduce capital spending in the short term.