Equities: AI themes support selective overweight – HSBC

HSBC’s Willem Sels and Lucia Ku highlight that global equities remain supported by AI-driven earnings and strategic government priorities. They keep an Overweight stance on global and US stocks, favouring Technology and broader AI ecosystem plays, while staying Neutral on Europe ex-UK and Emerging Markets. Japan and Asia ex-Japan are preferred for AI exposure, with selectivity across sectors and regions stressed.

AI-driven earnings underpin equity views

"Despite the recent sell-off, global equities remain well supported by AI, independence and strategic government priorities. We maintain broad exposure across regions and sectors."

"We remain overweight on US equities with a growth and quality bias, supported by resilient earnings, broader market participation and structural themes including AI, energy security, infrastructure and re-industrialisation."

"AI looks poised to drive earnings growth, with US third-quarter profits projected to rise by approximately 30% y-o-y, led by Technology, and Communications Services. Improving earnings beyond mega caps support broader market participation. Differentiation is key to distinguishing winners from laggards."

"While we favour Technology across regions, our preferred strategy is to maintain balanced exposure across the AI ecosystem, looking beyond chips to broader infrastructure and adopters, while diversifying across IT, Materials, Energy and Financials globally."

"While semiconductor companies could face slower order growth and increased competition, their current profits and order books remain strong, and the pace of new chip supply may be overestimated. Meanwhile, accelerating and broadening AI adoption is expected to benefit hyperscalers and adopters through cheaper computing, productivity gains and new revenue streams."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)