UBS remains optimistic on global stocks in 2026. The bank expects company earnings worldwide to grow at a healthy pace, with MSCI AC World profits forecast to rise around 12%. UBS believes the rally is no longer just about technology. The bank expects cyclical sectors to take on a bigger role, helped by ongoing spending on AI and supportive government and central bank policies.
After a long period dominated by technology shares, UBS says the tone of the market is changing. In 2026, the bank expects gains to be more evenly spread, with cyclical sectors stepping up to share the lead with tech. According to UBS analyst Fabian Deriaz, the pace of gains may slow, but the overall direction remains upward, helped by AI spending, lower interest rates, and government stimulus.
UBS says fiscal measures across major economies are lining up to support profits. US legislation, higher defence and infrastructure spending in Germany, and pro-growth budgets in Japan are expected to push global earnings higher. The bank forecasts MSCI AC World earnings growth of about 12% next year. Recent performance already shows cyclical sectors pulling ahead, reinforcing the case for diversification through banks, consumer-focused US stocks, and European industrial companies.
Cyclical Recovery Catalysts Align
The backdrop for markets remains constructive. Trade tensions are cooling, interest-rate cuts are increasingly in sight, and governments are still spending to support growth. In the AI sector, the conversation is also changing, with the focus moving from building technology to turning it into profits, drawing investor interest toward applications rather than just infrastructure.
At the same time, returns are becoming more uneven across markets. This dispersion is helping disciplined, systematic strategies navigate volatility, and despite ongoing swings, it keeps the door open for double-digit gains.
Sector and Regional Favourites
Market leadership is widening beyond a handful of sectors. Global banks are back in favour, investors are adding US consumer-focused stocks, and European industrial companies are benefiting from rising defence spending.
Technology and utilities continue to deliver, but gains are no longer as concentrated. With profits holding up well, the broader participation across sectors is helping to lower risks tied to overexposure in any single area.
Strategic Positioning Outlook
UBS says the foundations for earnings growth are still in place. According to the bank, today’s economic backdrop, combined with longer-term structural trends, should continue to support profits.
Investors are responding by spreading their exposure more widely, betting that the rally still has room to run into 2026. Short-term headlines may move markets from day to day, but the focus remains firmly on the longer-term direction.
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