HOLT Global Overview - H1 2026: Extreme market signals and the implications of higher for longer interest rates

Research evidence excerpt

HOLT Global Overview - H1 2026: Extreme market signals and the implications of higher for longer interest rates

Global Research

22 June 2026ab

HOLT Global Overview - H1 2026: Equities

GlobalExtreme market signals and the implications of higher for longer interest rates

Michel Lerner, CFA

Head of HOLT

AI, momentum trades, and echoes of the dotcom bubble michel.lerner@ubs.com

+44-20-7883 3649

The relentless rise of Momentum stocks, especially AI-related names, increasingly resembles the lead-up to March 2000 market peaks. AI trades

have become the ultimate consensus longs, ranking as among the most crowded long Thematics on UBS Quant Research’s Crowding data.

Unlike in the dotcom bubble, however, today’s Tech outperformance is underpinned by stronger fundamentals. US Tech’s value creation, as

measured by HOLT Economic Profit (EP), is roughly 10x its 2000 level. Equally, the EP of Global Tech ex US is now higher than the EP of all European

listed equities on aggregate.

That said, the CFROI outlook for hyper-scalers faces mounting pressure due to their significant increase in capital intensity. Meanwhile, the rest of

the AI food-chain continues to show a positive CFROI trajectory, but their valuations now assume extraordinary future profits at levels never

reached before. In this context, some Tech stocks, particularly in Asia, nonetheless continue to have relative valuation support.

Outside of Tech and AI, where are the opportunities?

The divergence in performance between AI/Tech and "old economy" stocks means that a number of lagging market segments trade on attractive

valuations. Selectivity is key, however, given the few non AI/Tech stocks posting positive CFROI revisions and improving CFROI trends.