UBS Forecasts AI Capital Spending to Hit $1.5 Trillion by 2028

UBS strategist Matthew Carter advises investors to diversify their artificial intelligence exposure beyond a small group of technology giants. This recommendation follows a recent technology selloff that raised concerns over how AI infrastructure is funded and whether it can generate sufficient revenue and cash flow to justify the costs.

Despite these uncertainties, UBS has increased its aggregate AI capital spending forecasts, projecting expenditures of $1 trillion in 2026, $1.4 trillion in 2027, and $1.5 trillion by 2028. Carter suggests that rising capital expenditure creates uncertainty regarding returns, making it necessary to shift allocations toward companies with strong balance sheets and pricing power.

Recommended targets for diversification include semiconductor manufacturers, cloud providers, and suppliers of electricity and cooling. Carter also suggests geographic diversification into European industrial groups and Asian memory chip suppliers, while favoring the financials, health care, and industrials sectors over pure technology plays.