In a new market research report, Swiss investment giant UBS forecasts significant growth in the artificial intelligence (AI) hardware market. Analysts at UBS predict that the broader AI hardware market could reach a valuation of $90 billion by 2025, with a compound annual growth rate (CAGR) of 20%. The bank considers AI as a horizontal technology with vast potential across various industries and applications.
The AI market currently holds an estimated market share of $207.9 billion, and UBS expects it to skyrocket by 788.64% to reach $1.87 trillion by 2030. Alongside AI, UBS also highlights big data and cybersecurity as sectors expected to experience robust growth in the coming years. The bank believes these three foundational technologies are at inflection points and will see faster adoption as enterprises and governments increase their focus and investments in these areas.
UBS's AI forecasts are part of a broader report on tech stocks. While the investment bank remains "least preferred" on the global information technology sector due to elevated valuations, it still identifies investment opportunities in the tech sector. Technology represents the largest component of the MSCI All Country World Index, accounting for 22.5% of the equity index. UBS advises investors to evaluate their current tech stock allocations but suggests selectively adding exposure instead of aggressively reducing tech holdings.
For investors seeking capital protection in the short term, UBS recommends rotating away from highly cyclical stocks, such as Asia-based semiconductor companies, and shifting towards sectors that are less affected by economic slowdowns, such as software.
As the AI hardware market continues to expand, driven by technological advancements and increased adoption, investors and industry players are positioning themselves to capitalize on the growth potential. With AI, big data, and cybersecurity at the forefront, the tech sector remains an area of interest for those seeking long-term investment opportunities.
