UBS Global Wealth Management’s chief investment officer Mark Haefele argues investors must abandon nostalgia for the old international order. He warns the world is now marked by geopolitical rivalry and fragmentation, urging a shift toward diversification and broader equity exposure to navigate a more volatile landscape.

The brokerage forecasts the S&P 500 reaching 7,700 by year-end, citing 12% earnings growth for 2026. However, UBS notes the recent rally has been narrow, with a handful of AI-focused stocks outperforming the broader market by a factor of five over three years.

Looking ahead, UBS expects leadership to shift from semiconductor firms to companies selling AI solutions. The firm highlights massive capital expenditure, forecasting global AI spending to reach $1.3 trillion annually by 2030, creating beneficiaries across multiple sectors.

UBS upgraded US consumer discretionary stocks and emerging-market bonds, forecasting European earnings acceleration. The drive for strategic autonomy is creating investment opportunities, from a $500 billion Taiwan semiconductor deal to increased defense spending in Germany and the US.