Business · Markets · 55 mins ago
UBS warns an AI investment slump could trigger a global market downturn
UBS expects AI growth to lift US stocks and forecasts a 12% return for the S&P 500 in 2027.
Its main outlook assumes continued investment in data centres and strong earnings from large technology and chip companies.
A weaker-than-expected AI boom is a risk scenario, not UBS’s central forecast.
Cheaper Chinese AI models or a shift to more local infrastructure could undermine demand for large data centres and the investments behind them.
In that scenario, UBS sees the S&P 500 falling 25% by mid-2027, with a technical recession in the United States and economic contraction in the euro zone.
Gold and US and German government bonds could gain as investors seek safer assets and central banks cut interest rates.
UBS says the risk is one reason to diversify, and includes buying gold among its recommendations for 2027.
UBS says a slump in artificial intelligence investment could trigger a severe downturn in global markets in 2027.
In that scenario, the S&P 500 would fall to 5,500 points by mid-2027, about 25% below its current level.
UBS says the US would enter a technical recession in the final two quarters of 2027, while the eurozone would contract.
The bank’s central outlook is more optimistic, with AI continuing to drive earnings growth and a potential 12% return for the S&P 500 in 2027.
UBS identifies cheaper Chinese AI models and a shift toward local infrastructure as possible causes of an AI investment slump.
- Who
- UBS analysts.
- What
- The bank outlined a scenario in which disappointment with AI investment could drive a global market downturn.
- When
- The report covers 2027 and 2028. The potential downturn is forecast for 2027.
- Where
- The United States and Europe, with effects on global markets.
- Why
- UBS says cheaper AI models from China or a shift to local infrastructure could undermine major investments in AI and data centres.
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- S&P 500 downside target
- 5,500 points by mid-2027
- S&P 500 decline
- About 25% from its current level in the downside scenario
- US recession
- Technical recession in the final two quarters of 2027
- Euro Stoxx 600 downside target
- 575 points, compared with 658 at the time of the report
- Gold forecast
- $7,000 an ounce by the end of 2027
What people are saying
Es improbable que el crecimiento de los centros de datos se ralentice a nivel global y en un horizonte de 2-3 años.
en los últimos dos años, las previsiones basadas en modelos son de uso limitado cuando la distribución de los posibles desenlaces es muy amplia o incluso binaria