UBS Group AG

UBS now expects artificial intelligence capital expenditure to reach nearly $1 trillion in 2026 before climbing to around $1.4 trillion in 2027, with surging memory costs accounting for most of the increase. The bank's updated estimates put total AI capex at $998 billion this year, almost double the $506 billion recorded in 2025, and forecast spending of $1.447 trillion next year. Memory is emerging as the main source of that growth, with UBS estimating memory spending will climb from $71 billion in 2025 to $367 billion this year and $923 billion in 2027, while other AI-related costs are estimated at $631 billion in 2026 before declining to $525 billion next year. That means higher memory costs will account for about 60% of the increase in AI capex this year and more than the entire net increase in 2027, and across the two years UBS calculates that roughly 90% of the nearly $1 trillion increase in AI capital expenditure between 2025 and 2027 will come from higher memory spending. Memory represented about 14% of total AI capex in 2025, a share the bank estimates will rise to 37% this year and reach 64% in 2027, and UBS said price-driven increases would add relatively little to real U.S. gross domestic product, instead representing a transfer of income and profits toward memory producers in Asia.

The Federal Reserve raised its benchmark rate by a quarter percentage point to a target range of 3¾ to 4 percent, with Chair Kevin Warsh declaring that the central bank does not need to harm the labor market to bring inflation down to its 2% goal. Warsh said "the plain fact is that inflation is too high and has been for too long," that he would be hard-pressed to call broad financial conditions restrictive, and that the Committee had "removed a dose of accommodation." A UBS research note led by economist Jonathan Pingle called that phrasing much stronger wording than the market expected, and argued Warsh's policy response function has shifted versus prior Fed chairs, becoming more sensitive to financial conditions and less sensitive to the labor market. The Summary of Economic Projections shows a median path of real GDP growth of 2.3% this year and 2.4% next year, with total PCE inflation at 3.7% this year falling to 2.3% next year and a median appropriate policy rate of 4.1% at year-end. Warsh, who said he has not offered a projection of his own, described a unanimous Committee vote, said inflation risks skew to the upside while labor risks are roughly balanced, and cited a 4.1% jobless rate along with rising job openings and hours in calling the labor side of the mandate "in good shape."

UBS has upgraded industrial metals to Overweight, turning more bullish on the sector as it argues structural forces will support commodity prices over the coming years. The bank's strategists pointed to a steady rise in emerging market demand, global efforts to reach net-zero emissions, climate change and structural underinvestment across almost every sector. UBS said it expects commodities to deliver strong diversification benefits for traditional bond and equity portfolios over the medium term, with both macroeconomic conditions and market-based signals remaining supportive. The strategists wrote that the recent pullback in base metals prices offers an opportunity to increase exposure, and that constrained supply and supportive structural demand should provide a floor for prices and underpin a recovery over the coming quarters. Still, the bank cautioned that prices are unlikely to rise in a straight line and recommended an actively managed approach built on three pillars: dynamically adjusting overall exposure to the asset class, taking a differentiated sector approach, and enhancing returns on cash collateral by replacing money-market securities with a higher-yielding portfolio.

UBS told investors Thursday that the Federal Reserve's latest interest rate increase should not derail the equity rally, even as policymakers signaled more tightening to come. The Fed unanimously raised its target range by 25 basis points to 3.75% to 4.00%, with Chair Kevin Warsh saying officials had "removed a dose of accommodation" and that broad financial conditions were hard to describe as restrictive. Despite the hawkish tone, with 16 of 18 officials now expecting at least one more hike this year, UBS said much of the tightening is already priced in, noting markets had braced for nearly four increases over the cycle versus UBS's forecast of two. The bank pointed to the Fed's upgraded growth forecasts and strong August retail sales, which rose 1.2%, as evidence the tightening is manageable, and forecast industry AI capital spending rising to $1.2 trillion in 2027 from $900 billion. UBS also forecast S&P 500 profit growth of 25% in 2026 and 14% in 2027, recommending diversified exposure while avoiding rate-sensitive concentration.

UBS raised its price target on Valero Energy Corporation from $355 to $450 on September 8 while keeping a Buy rating on the shares, a revision that implies nearly 17% upside from current levels and sits above the stock's all-time high of over $393 reached earlier this month. The call rests on expectations that unusually strong global refining margins will persist longer than previously assumed, as damaged or idled refineries take time to return to full operations and Ukrainian attacks on Russian refineries further constrain worldwide capacity. Valero's COO, Gary Simmons, said an arbitrage opportunity for jet fuel exports to Europe has reopened, and the company expects jet fuel margins to improve over the remainder of the third quarter as refiners shift to winter diesel specifications. The refiner returned $2.6 billion to shareholders in its highest-ever second quarter, up sharply from $695 million a year earlier, and TD Cowen's Jason Gabelman expects Valero to repurchase about 20% of its market value between the third quarter and the end of next year. UBS's move signals confidence that elevated crack spreads can support further gains, though a pullback in refining margins remains the key risk to earnings expectations and the share price.

Blackstone Inc. is reportedly finalizing a full exit from Bumble Inc. after roughly doubling its money on the dating app, even as Bumble's shares have fallen about 96.1% since its 2021 IPO. Blackstone and venture firm Accel invested $2.1 billion in 2019 to acquire a majority stake in Bumble's parent company MagicLab at a $3 billion valuation, and Blackstone generated a 98% internal rate of return by systematically reducing its exposure, according to a Business Insider report. In late 2020 the firm used Bumble's debt to issue a $334 million dividend to itself, then cut its stake from 83.6% to 53.2% at the IPO, netting nearly $2 billion, and sold another $1 billion of stock in 2021 when shares traded above $50. A deal with UBS allowing sales of just under 5% of the company each quarter positions Blackstone to exit fully by early next year, and its remaining 22.4 million shares are now worth approximately $66.75 million, versus the $1.084 billion a similar volume of shares yielded in 2021. Blackstone has also vacated its two board seats, with Jonathan Korngold stepping down in June and Martin Brand in August, while Bumble faces a 16.4% year-over-year decline in paying users; M Science analyst Chandler Willison told Business Insider that a private equity group is the most obvious potential buyer for Bumble.

UBS downgraded NuScale Power Corp. to Sell from Neutral and cut its price target to $6 from $10, sending shares down 13.66% intraday on an implied downside of about 40%. Analyst Jon Windham cited an extended build timeline and the absence of firm customer commitments, with competitors already moving toward construction. Windham estimates the market currently implies $124 million of 2028 EBITDA against his own forecast of $29 million, a gap of more than four times, and he models roughly $700 million of cumulative cash burn from 2026 through 2028 on the assumption that only one project begins construction in 2028. He projects revenue rising from $185 million in 2028 to $924 million in 2030, a 123% compound annual rate, with earnings negative throughout. UBS cautioned that project delays, setbacks at RoPower, and limited progress with the Tennessee Valley Authority could widen the gap further, and noted that a five-year-plus build leaves NuScale behind rivals already breaking ground.

High-grade bond issuance surged to $57 billion across 30 offerings on Tuesday and Wednesday alone in the holiday-shortened week after Labor Day, putting September on pace for a fourth straight monthly record. June, July and August totals of $184 billion, $137 billion and $151 billion were the highest ever for those months, according to LCD, and syndicate desks are now suggesting September supply of well over $200 billion, which would supplant last September's unprecedented $189 billion output. That year-ago record included the first major shot in the ongoing AI debt barrage, an $18 billion blockbuster print for Oracle, whose 5.95% notes due 2055 now yield roughly 7.875% on dollar prices south of 79% of par, with investors demanding spreads of T+245 versus the T+125 pricing level a year earlier. This week's biggest deals are GlaxoSmithKline's $6.5 billion offering backing its Nuvalent acquisition and a $6 billion print for UBS, though the week's average deal size of $1.9 billion trails this year's record-setting average through August by about $220 million. Roughly 20% of last month's proceeds, or $31 billion across 10 offerings, were earmarked for M&A funding, the highest share since May, while August data center and AI financing cooled from the prior two months but still included Alphabet's $25 billion package of 10 tranches and Blackstone-backed QTS Central Issuer's debut $3.9 billion offering of 6.625% five-year senior secured data center bonds.

UBS told clients in a note Thursday that it prefers gold over platinum heading into the fourth quarter, citing weaker fundamentals for the white metal after a second consecutive quarterly surplus. Strategist Giovanni Staunovo said the platinum market was oversupplied again in the second quarter, and the World Platinum Investment Council estimated that surplus at 244,000 ounces, equivalent to 15% of global demand, while revising the first-quarter surplus higher to 304,000 ounces. For the full year, the council now sees a surplus of 265,000 ounces, a sharp swing from a previously forecast deficit, driven primarily by weaker investment demand. Staunovo attributed the oversupply to recovering mine supply in South Africa and Zimbabwe after last year's flooding, higher scrap volumes and softer demand, with Chinese jewelry demand weakening and autocatalyst demand falling as rising electric-vehicle adoption cut production of combustion-engine cars. He added that with platinum again more expensive than palladium, new vehicle models may revert to palladium-based catalysts, and that UBS forecasts point to modest downside from current levels in the near term followed by broadly sideways prices over the next 12 months.

UBS Group AG announced the results of its nine concurrent debt tender offers and increased the Maximum Purchase Consideration from $4,000,000,000 to $5,849,096,719.81. The offers expired at 5:00 p.m. Eastern time on September 10, 2026, with settlement set for September 14, 2026. According to D.F. King & Co., Inc. and UBS AG, $7,933,623,300 combined aggregate principal amount of notes was validly tendered and not validly withdrawn, and that entire amount has been accepted for purchase. All notes tendered under the Any and All Offers were accepted, and the Maximum Purchase Condition, as increased, was satisfied for every series of Maximum Purchase Notes, so all validly tendered Maximum Purchase Notes were also accepted. Holders will receive the applicable Total Consideration per £1,000, €1,000 or $1,000 principal amount in cash on the settlement date, plus accrued coupon payment, with interest ceasing to accrue on that date. UBS Investment Bank served as Dealer Manager, D.F. King & Co., Inc. as Information Agent and Tender Agent for the USD offers, and UBS AG as Tender Agent for the non-USD offers.

UBS maintained a neutral rating and a $296 price target on Apple after the company unveiled a foldable iPhone Duo starting at $1,999 and raised Pro and Pro Max prices by $100. Apple shares rose about 1.5% Thursday to $319.60, above UBS's target. The firm said the higher pricing may not fully offset rising memory expenses, and that a larger increase could have pressured customer demand. Apple's updated lineup now spans the Pro, Pro Max and Duo, with UBS expecting base, Air and e versions of the iPhone 18 early next year. Other analysts diverge: Bank of America cut its target to $370 while keeping Buy, Melius Research and Evercore ISI stayed Buy-equivalent, and Jefferies kept Underperform with a $263.66 target.

Sergio Ermotti, Chief Executive Officer of UBS, warned that investors in financial markets have become too complacent about risk, even as geopolitical and economic risks continue to mount. In an interview with CNBC, he said markets should be far more volatile than they are now, even though heavy investment in artificial intelligence, data centers and new technologies is still helping to support economic and market growth. Ermotti pointed to pressure from the wars in Iran and Ukraine affecting energy and shipping, competition between the United States and China weighing on supply chains, and higher borrowing costs and still-elevated inflation. As a result, UBS's wealthy clients are spreading their portfolios across more industries and regions, though overall asset allocation has not changed significantly over the past year, and this does not mean investors are making a mass exit from US assets. Some of the money that flowed into emerging markets about a year ago was mostly excess cash being put to work, rather than selling US assets or reducing dollar holdings. Ermotti expects the European Central Bank to begin a rate-hiking cycle, with the US Federal Reserve to follow, and the Bank of Japan likely to raise rates as well. He expects roughly two more rate hikes in the coming months, which means investors should not expect borrowing costs to quickly return to the low levels seen before the recent bout of inflation pressure.

UBS assesses that the U.S. Federal Reserve will raise interest rates by 0.25% in September and December this year, following stronger-than-expected August nonfarm payrolls data. Meanwhile, Citigroup has pushed back its forecast for the Fed's next rate cut to June 2027, scrapping its previous expectations of two cuts late this year and another early next year. Earlier, UBS Global Wealth Management had expected no policy changes this year but revised its view after August nonfarm payrolls rose by 162,000, surpassing analysts' forecast of 56,000, while the unemployment rate held steady at 4.1%, underscoring the strength of the U.S. labor market. UBS noted that hawkish policy communications, particularly from Fed Chair Kevin Warsh at the Jackson Hole meeting, along with rising inflation risks from supply bottlenecks and strong August labor data, were sufficient to prompt a change in outlook. Currently, financial markets reflect about a 58% probability of a 0.25% rate hike at the September 15-16 meeting, up from 52% on Thursday, September 3, before the jobs report, according to CME's FedWatch tool. Citigroup also adjusted its rate path, moving its forecast for the next Fed rate cut to June 2027 from October 2026, and now expects cuts of 0.25% in June, September, and December 2027, dropping its previous expectations for cuts in October and December 2026 and January 2027. Citigroup stated that recent labor data suggests policymakers are likely to view overall employment conditions as stable and will shift focus more toward inflation. Investors will now turn attention to August CPI and PPI data due this week to further assess the Fed's rate direction.

SAP SE has filed a shelf registration for US$1.04 billion covering 5,000,000 ordinary shares for an ESOP-related offering, while UBS downgraded the company citing slower-than-expected AI agent rollout, higher AI token costs, softer cloud backlog expectations, and reduced EBIT guidance. These developments highlight a tension between SAP's ambition to embed AI across its platform and investor concerns about the current pace and economics of that monetization effort. The ESOP share sale is seen as immaterial to the investment thesis, but the AI-related concerns are more significant. SAP's recognition on TrustRadius for its Sales, Service, and Commerce Cloud products shows customers using AI-powered workflows at scale, offering a counterpoint to worries about slow agent rollout. However, rising AI token costs could pressure margins, and the company's narrative projects €53.0 billion revenue and €11.2 billion earnings by 2029, requiring 11.5% yearly revenue growth and about a €3.4 billion earnings increase from €7.8 billion today. Optimistic analysts had assumed revenue could reach about €56.2 billion and earnings €12.5 billion, but the latest news may prompt a rethink of that AI-driven uplift.

UBS expects the Federal Reserve to leave rates unchanged at its September 16 meeting, but flagged conditions that could force a shift. A stronger-than-expected labor-market report or renewed inflation pressure would increase the likelihood of a more hawkish Fed outcome, according to the bank's strategists. For now, UBS said the evidence does not support tightening, as year-over-year inflation readings are expected to ease around the turn of the year. The latest employment report was weaker than expected, and a second set of soft readings next week would further reduce the case for a September move. Markets currently price a Fed hike at roughly 40%, against an almost fully priced European Central Bank increase on September 10, and UBS noted that if the ECB hikes and the Fed does not, EURUSD is likely to move higher. Kevin Warsh's Jackson Hole keynote on Friday is the near-term catalyst, with UBS cautioning that expectations are so high that even silence could move markets.