Mark Andersen, UBS Global Wealth Management’s Co-Head of Global Asset Allocation, says AI and tech remain key investment themes. He warns of growth slowdown but sees rate cuts as investor-friendly.

New York

Mark Andersen, Co-Head of Global Asset Allocation at UBS Global Wealth Management, emphasized that artificial intelligence and technology remain central themes for investors in the coming years. He noted that while some geopolitical and fiscal risks have lessened, uncertainties around tariffs, economic growth, and inflation persist.

Andersen stated that central banks, including the US Federal Reserve, are expected to cut interest rates, creating a favorable environment for investors. He highlighted the relative strength of US equities, especially tech companies with international revenues, and pointed to AI adoption as a major transformational opportunity. Sectors related to AI, such as resources and battery development, were also identified as appealing investment areas.

Andersen: AI is just the game in town over the next couple of years

So we listed a bunch of factors there. The market seems to be shrugging it off at least right now in the pre-market futures are higher in your mind. What's the biggest one of those things that investors should be mindful of and could potentially impact this market in a negative way. So first and foremost we have to acknowledge there's a lot of the risks that have been reduced over the last couple of months both related to geopolitics fiscal uncertainty trade uncertainty. I think when we look into the second half of the year we're relatively constructive still. But Frank the probably the one thing we worry the most about is the same uncertainty that Powell was just highlighting before. That's a world in which we haven't really seen the impact yet on tariffs. We know that we're going to see an economic slowdown in the second half of the year. We don't know the extent to which we're going to see an economic slowdown. We also don't know to which extent inflation is going to hit. I think at the moment the market is basically pricing a little bit of a dip down in growth a little bit of a move up in inflation but ultimately central banks around the world including the Fed. That's going to cut interest rates and that's an environment that global investors are just very appreciative of these days. All right. So you're feeling fairly confident about interest rates even though Jay Powell said tariffs really seem to be the roadblocks stopping the Fed from doing it. I also want to talk to you about the dollar. We're just showing the dollar chart a second ago down about a half a percent this week at its lowest level since February of 2022. What do you think that means for the upcoming earnings season here in the US. And what does it also mean for global equities. I think from a U.S. earnings perspective obviously this is not bad for some of those international companies including a lot of the tech names that are generating a good part of their revenues abroad translating into something which is quite constructive on a dollar note. So that means that for our global investors and our portfolios we lean into a related companies many of which are located in the US. And we also think that the U.S. equity market is likely to outperform some of its European peers. Emerging market is another region that we like in this type of environment to be with lower rates. We could all again translating into a very solid earnings growth. And conversely in places like the U.K. brought a euro zone where some of those headwinds are going to come now with with a stronger euro in particular but also a European central bank that's very likely to be at the end of its cutting cycle. Now with all this in mind where would you put money. We're going to hit this a little bit later in the show. But the S&P equal weights kind of broken out. Where do you see the real action in the market. Is it a mega cap tech. Is it in the small caps perhaps. I'm talking U.S. here. Is it perhaps just keeping it in momentum socks. Names like Palantir that have really moved the market higher. Is it an industrials that are part of the market higher. Where do you see the biggest opportunities. We look at the second half of the year. We look into the second half of the year and apologies for sounding like a broken record here potentially. We do think that A.I. is just the game in town over the next couple of years. So that's one of our transformational investment opportunities that we keep talking about. When we look at U.S. companies specifically we haven't broken sort of the 10 percent adoption mark of A.I. when we survey companies. So if we go six months back that number was around 5 percent of companies using A.I. now it's close to 10 percent. That number is only going to go higher. So A.I. and tech is still a place that we really like to look at how and resources and other ones. So a lot of the companies that are benefiting from this A.I. transition. So companies that can you know help create you know the metals that are going into these processes more efficient use of electricity etc. battery developments and so forth. That's something that we find very appealing as well.

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