Despite strong labor market data, UBS analysts see the US stock market rally moving beyond tech giants.
“The rally has continued to be led by tech,” UBS acknowledges, adding that they “expect the rally to broaden and investors should not neglect opportunities beyond recent US tech leaders.”
While UBS remains positive on major US tech companies and artificial intelligence, they believe other sectors offer compelling opportunities.
“Secular trends including energy transition, blue economy, and water scarcity offer quality growth opportunities,” the note highlights.
UBS specifically points to “global greentech companies and investments in renewable energy infrastructure” as well as firms focused on “wastewater treatment solutions” and “innovations that cut pollution at source.” These areas are expected to benefit from growing environmental concerns.
Water scarcity is another area of focus for UBS. They estimate the “market size of industries looking to address water scarcity to grow further from the current USD 655bn.”
Overall, UBS recommends “adding quality growth to portfolios” as companies with exposure to these long-term trends “should continue to deliver robust earnings growth.”
