UBS's Matthew Carter: widen AI bets beyond tech giants

The call comes as the latest technology selloff reflects growing scrutiny of how companies fund AI infrastructure and whether that investment translates into revenue, profits and cash flow. Some technology groups reported negative quarterly free cash flow, and indebted computing providers faced pressure over financing risks, according to the note.

Against that backdrop, UBS still raised its aggregate AI capital spending forecasts, citing strong cloud growth and demand for computing capacity. That combination — heavier spending alongside questions about returns — is what shapes the preference for companies with healthy balance sheets, pricing power and established customer demand rather than businesses dependent on borrowing or consistently high infrastructure utilization.

Carter's diversification advice extends beyond sectors to geography. Asian companies supply memory chips and semiconductor components, while European industrial groups stand to benefit from electrification, automation and data center construction, per the note. For investors weighing protection, UBS points to capital preservation structures, while flagging that protection depends on issuer solvency and that reverse convertibles carry substantial loss risk if underlying shares decline.