Aug 21, 2026 · 23 min
UBS sees more S&P 500 upside despite rising-rate risks
Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook
The bullish case rests on AI investment and earnings growth, but higher long-term rates, inflation, policy restraint, and data-center overbuilding could derail it.
- 1UBS raised its S&P 500 targets as AI infrastructure spending and earnings growth continue supporting the bull market.
- 2Rising long-term rates now pressure equities, while persistent inflation and restrictive Federal Reserve policy remain key risks.
- 3David Lefkowitz recommends staying invested while limiting concentration in technology and AI holdings through diversified structural-growth exposure.
Don't miss
David Lefkowitz pairs a bullish S&P 500 outlook with a warning that excessive AI-related investment and data-center construction could undermine the thesis.
The brief
Dan Cassidy introduces UBS’s monthly CIO Equity Pulse with David Lefkowitz, who explains why the firm raised its S&P 500 targets and still sees room for the bull market to extend.
Lefkowitz identifies AI infrastructure spending and earnings growth as the main supports for further upside, with technology suppliers benefiting as capital expenditure remains strong.
The backdrop is less forgiving than the low-rate era: rising long-term yields, persistent inflation, and a potentially restrictive Federal Reserve now weigh directly on equities.
The bullish case could also fail if AI investment produces too much data-center capacity, turning a powerful growth engine into a source of overbuilding and disappointment.
Lefkowitz’s portfolio guidance is measured rather than maximalist: remain invested, manage concentration in technology and AI, and diversify across structural growth themes.
What was said on this episode
9 statements · 7 positive · 1 negative · 1 mixed
The current bull market has further room to run.
“we think this bull market has further to go”
Listen at 1:33
Surging corporate profits are driving higher S&P 500 targets.
“the main driver of this increase is really just the surging in corporate profits that we are currently seeing”
Listen at 2:23
AI infrastructure investment is materially boosting corporate earnings.
“the AI infrastructure build out. That is really supercharging the numbers.”
Listen at 2:39
Investors should stay invested while managing concentration risk.
“our main message here is stay invested, but also be mindful of any concentration risk that you have”
Listen at 18:22
Investors should limit exposure to highly appreciated technology and AI holdings.
“We just think it makes sense to. Make sure you don't have too much exposure in those areas.”
Listen at 18:49
David remains broadly bullish on equities.
“But we're still bullish in general.”
Listen at 18:56
Investors should maintain exposure to structural growth themes.
“you want to continue to have exposure to structural growth themes”
Listen at 19:01
UBS favors financial and industrial sectors.
“we like financials. We like industrials in that segment of the market.”
Listen at 20:06
Investors should not ignore markets outside the United States.
“I wouldn't ignore XUS either.”
Listen at 20:13
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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