UBS: "S&P 500 seen at 7,700 by year-end…AI momentum to persist"

JH Kim

Summary

UBS said the S&P 500 could reach 7,700 by year-end, implying about 12% additional upside from current levels.
It cited the Federal Reserve’s easing stance, solid economic growth and continued AI momentum as drivers, while warning of the potential for heightened short-term volatility.
UBS advised easing concentration in the “Magnificent Seven” and said a diversified strategy that expands exposure to financials, healthcare and utilities is needed.

Swiss investment bank UBS said the S&P 500 could reach the 7,700 level by year-end, implying roughly 12% upside from current levels.

According to Walter Bloomberg, a breaking-news account, on the 12th (local time), UBS Wealth Management cited the Federal Reserve’s easing stance, solid economic growth and continued artificial intelligence (AI) momentum as key drivers. It added, however, that the possibility of increased short-term volatility following the strong start to the year cannot be ruled out.

It noted that tech earnings have generally been solid, but with investor expectations elevated, some megacaps saw their shares lag after reporting results. AI is still underpinning profits at major technology companies, it said, but scrutiny is also intensifying over the scale of related investment and profitability.

UBS advised reducing concentration in the so-called “Magnificent Seven” and broadening portfolios into a wider range of names. It highlighted financials, healthcare and utilities as preferred sectors, saying a diversified investment strategy could offer balance in participating in further gains while providing downside protection.