UBS Maintains Positive Semiconductor Outlook, Recommends Selective AI Investment as Token Consumption Rises 8x

According to UBS Asset Management, on July 6, the asset manager recommended selective investment in artificial intelligence-related stocks while maintaining a positive view on semiconductors, stating that the sector is not in a bubble despite continued market volatility.

UBS cited strong demand signals, including an 8x increase in weekly AI token consumption year-to-date and recent cloud computing contracts between hyperscalers and leading AI labs priced at 4 times market rates. The firm noted that despite semiconductor shares gaining strength this year, the Philadelphia Semiconductor Index's forward price-to-earnings ratio stands at approximately 26x—significantly lower than the 150x peak during the dot-com bubble. However, UBS warned that rising capital expenditures could pressure hyperscaler cash flows in the second half of 2026, potentially creating downward pressure on semiconductor and AI hardware valuations as investor demands for capital discipline intensify.