HOLT Industrials "Bridging the gap between AI hype and valuation discipline"

Research evidence excerpt

HOLT Industrials "Bridging the gap between AI hype and valuation discipline"

Global Research

28 May 2026ab

HOLT Industrials Equities

GlobalBridging the gap between AI hype and valuation

discipline Industrial

Brendan Munson

HOLT Sector Specialist

brendan.munson@ubs.com

This report utilizes the UBS HOLT framework to provide an updated look at "pick-and- +1-212-325 2784

shovel" Industrials with exposure to the AI boom.

Chinazom Chidolue, CFA

It's been a good time to be in the AI "pick-and-shovel" business. Strong stock chinazom.chidolue@ubs.com

price performance across AI-related Industrials YTD has been underpinned by improved +44-20-7888 3051

corporate performance. In aggregate, our custom universe of AI Power & Infrastructure

Industrials from around the world has experienced a surge in CFROI from the 5-10%

historical range to 15%+ along with an acceleration in asset growth. The interchange

between improved economic returns and a growing asset base has led to a

compounding of value creation. Specifically, aggregate Economic Profit has grown at a

37% CAGR over the last four years. Click here to access the full portfolio of ~80

names in HOLT Lens.

FigureSource:UBS1: AIHOLTPowerLens. Reflects& InfrastructureTransaction EconomicGroupProfitEconomic(EP) which Profitis calculated($B)AIas the excess

return (Transaction CFROI less the cost of capital) multiplied by the firm's invested capital.

Valuation multiples have re-rated, reflecting investor optimism on the growth

opportunity. On a size-weighted basis, the Economic P/E multiple for the AI Power &

Infrastructure group has expanded from a range of ~25-30x post-COVID to just under

35x at the beginning of this year to nearly 40x currently. At ~40x on HOLT's Economic