Speaker · Updated
David Lefkowitz: latest market views
UBS Chief Investment Office (UBS Financial Services Inc.)
Summary
David Lefkowitz, CFA, is Head of US Equities (Head of Equities Americas) in the UBS Chief Investment Office, where he co-authors the CIO's US equity research and House View positioning.
Chorus has 18 views from David Lefkowitz across 2 episodes on UBS On-Air and CNBC Power Lunch since October 8, 2026.
What they talk about most
- AI infrastructure & data centers · 3
- US stock market outlook · 3
- US rates & the Fed · 2
- AI bubble & tech valuations · 1
- AI: overall outlook · 1
- Earnings & corporate profits · 1
- Enterprise AI adoption & AI software · 1
- Middle East & Iran · 1
- Oil & fuels · 1
- US elections & politics · 1
- US growth & recession risk · 1
- US housing · 1
The latest views
Newest first. Every quote is checked against the episode's transcript.
AI infrastructure & data centers
Leveraged neocloud data-center operators are under pressure while hyperscalers hold up better.
Higher interest rates hurt companies that rely on external capital and carry a lot of leverage. Young neocloud startups in the data-center buildout fall into that group, and their shares are under heavy pressure. Hyperscalers, which have large data-center businesses and have raised or are still raising capital, are reacting much less. The gap in reactions shows the market is becoming more selective about debt-funded AI infrastructure.
“you can really see this by looking at sort of the different reaction that we're seeing from some... of the neo clouds. These are kind of startups... And those are becoming under a lot of pressure versus some of the more... hyperscalers, which have massive data center businesses”at 2:53
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
AI infrastructure & data centers
AI compute remains scarce; rising GPU rental prices show demand still outstrips supply.
The demand story has not changed. GPU rental prices, which show what it costs to rent an AI chip, are still rising. Rising rental prices mean the industry is still short of compute and supply and demand remain mismatched. This is the main reason the speaker stays constructive on AI demand despite recent volatility.
“I think the story with demand really hasn't changed. ... when you look at the price it costs to rent an AI semiconductor. These are the GPU rental prices. ... we still see that these prices are going up. And so that to us means we are still very short compute”at 3:38
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
Enterprise AI adoption & AI software
Enterprise AI app revenue growth slowed on safety-driven agent caution; expects reacceleration within months and quarters.
Private AI lab revenue growth has slowed. Some of that comes from one-time factors that have been widely reported. The main ongoing cause is a safety focus that makes enterprises reluctant to commit fully to AI agents until the risks are understood. Leading labs are also holding back on releasing higher-capability models. The speaker expects these issues to be sorted out with better controls, so AI application revenue growth could reaccelerate in the coming months and quarters.
“this whole focus on safety is also leading to some pullback in terms of demand from enterprises because they don't want to go all in on agents until they really understand what are the risks around that. ... I wouldn't be surprised if we do, in the coming months and quarters, see a reacceleration in the revenue growth for the AI applications.”at 5:13
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
Constructive on AI as a market driver, but later in the cycle and reliant on external capital; favor quality.
The speaker is not bearish and still sees AI as an important market driver with strong end demand. He also says the sector is later in its cycle and now depends much more on external capital. For that reason he advises moving up in quality within the AI complex and avoiding too much concentration in the market winners of the past three or four years. Broad exposure and an application-side focus are also recommended.
“So we're not bearish. We're still constructive on AI as an important market driver. ... We wanna recognize that we are later in this cycle, and we're now much more reliant on external capital”at 6:11
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
AI is not a dot-com replica; companies must earn returns, but a plausible path to returns exists.
The speaker rejects a like-for-like comparison with the 1999-2000 dot-com bubble. He agrees that AI companies will have to earn a return on their investment for the spending to pay off. He argues there are plausible and reasonable assumptions that give a clear line of sight to those returns. He acknowledges that this line of sight has become murkier in the very near term because of AI safety concerns.
“It's not an apples to apples situation... Ultimately, these companies are gonna have to earn a return on this investment, for all this to work out... we think there are plausible and reasonable assumptions that one can make to see a line of sight to earning a return.”at 7:15
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
Each 100bp Fed hike trims GDP about 40bp; expects about 30bp drag and little corporate profit impact.
The speaker uses a rule of thumb that every one-percentage-point rise in the Fed funds rate trims GDP growth by a little under half a percent, about 40 basis points. He expects a smaller drag of about 30 basis points. He does not think the impact on corporate profits will be very noticeable. Higher rates are less good for corporate profits and cause some valuation compression. The US economy is also less rate sensitive than it was historically, which limits the damage.
“rule of thumb is that 100 basis points of our, so one percentage point increase in the Fed funds rate. You typically wanna trim your GDP growth by... A little bit less than half a percent, so 40 basis points. And so we're not even looking for four. Right? We're looking for three.”at 8:46
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
Fed needs only modest further hikes, not restrictive policy; oil-driven inflation and a non-inflationary labor market limit it.
The speaker's firm raised its expected number of Fed hikes, but it does not think the Fed has to hike much more. The inflation the Fed is trying to fight is oil-driven, and the Fed cannot produce more oil or diesel, so tighter policy cannot fix the underlying cause. The labor market is not a source of inflation, unlike in 2022, when businesses struggled to find workers and wage growth was a concern. Together these mean the Fed does not need to move into a restrictive stance.
“we don't think the Fed has to hike a lot because the inflation that the Fed is trying to fight is this oil inflation, which they can't... They can't make more barrels of oil... And also, the labor market is not a source of inflation at the moment.”at 9:25
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
Housing is most rate-sensitive but already depressed by affordability, so little downside from higher mortgage rates.
Housing remains the most rate-sensitive part of the economy. However, housing activity has already been depressed because affordability is so poor. Because activity was already operating at a low level, higher mortgage rates have limited further downside to corporate profits and the broader economy. The speaker had earlier said 30-year mortgage rates above 7% act like a wet blanket on buyer enthusiasm.
“Now housing is still the most rate sensitive, but housing activity has been pretty depressed because affordability is so bad. So there's not much downside from higher mortgage rates”at 10:38
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
Middle East war is a big, unpredictable risk, but Trump's sensitivity to market pain should cap a 20% drawdown.
The conflict is a big risk. It has lasted longer than the consensus expected, and wars are inherently unpredictable, so investors should be prepared for volatility. The speaker thinks that if the conflict caused real pain in financial markets, Trump would respond, acting as a circuit breaker. That gives comfort that it will not lead to a 20% equity drawdown. A pullback from conflict-driven volatility would likely be a reasonable buying opportunity.
“This is a big risk. ... This has lasted longer than any of us thought. ... I think that still is a circuit breaker for Trump. So that gives me some comfort that this isn't gonna lead to, you know, a 20% drawdown in equities.”at 12:32
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
Q3 beats were solid and 2026 S&P 500 earnings growth is seen at 25%; growth is decelerating but still strong.
With about a quarter of S&P 500 market cap reported, Q3 numbers have been decent, with solid magnitude and breadth of earnings beats. Q3 earnings growth is expected to be around 28%. Q4 guidance is a bit weaker than recent quarters, so earnings are decelerating, but momentum remains strong. Analysts are not revising estimates down, and the firm expects 25% earnings growth this year and 14% in 2027, which could even be low. This keeps the earnings backdrop supportive for equities.
“the numbers have been, you know, pretty decent... the magnitude and breadth of earnings beats have both been... solid... We're looking for 25% earnings growth this year.”at 13:57
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
Oil-driven cost increases are a real but not dramatic earnings headwind for travel, freight and industrials.
Energy and oil are the one headwind visible in the early Q3 earnings season. Higher costs, mostly from oil prices, are clearly hurting companies in travel and freight, with impacts now showing up in industrials and consumer names too. The effect is not dramatic, but earnings momentum is more dented and is decelerating, with the Q4 guidance slightly weaker.
“this whole discussion on energy and oil, that clearly is a headwind for some companies... It's having an impact. It's not dramatic”at 14:22
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
Midterms bring no major policy change while Trump holds the White House; any election volatility should be short-lived.
The election is unlikely to be a major market event. With Trump still in the White House, legislation is unlikely to pass, and Democrats will not have 60 Senate seats. Trump still leads regulatory, foreign policy and trade decisions. Congress could flip, but the outcome is not expected to change policy much. Any negative reaction in sectors like health care or financials on fears about 2028 policy would be an overreaction and a buying opportunity. Market volatility from the election should be short-lived.
“I don't think it's gonna really be the market event. I mean, we're we're not looking for any, really, any policy changes as a result of the election outcome.”at 16:58
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
Stays constructive on US equities; S&P 500 target of 8,400 by June 2027 is unchanged.
The outlook rests on a three-legged stool of growth, the Fed and AI. Growth may decelerate somewhat because of Fed hikes, but analysts are not expected to mark down earnings. The Fed is less accommodative but is not expected to become a headwind, since inflation is not pervasive and not in the labor market. AI end demand remains strong, and any growing pains around safety could improve. The market is forward-looking and may already anticipate the end of Fed hikes, so the firm sees no reason to change its June 2027 S&P 500 target of 8,400.
“we still don't see a reason to change our June 2027 price target, which we have at 8,400 for the S and P.”at 20:44
UBS On-Air: Top of the Morning: CIO Equity Pulse - Monthly performance update & outlook ·
Stocks have more upside for the rest of 2026; bull market drivers remain intact.
Lefkowitz expects more upside for stocks over the rest of the year because the drivers of the bull market remain intact. He cites very solid earnings and expects another good set of results in Q3 earnings season, not just from AI-levered infrastructure companies but also from consumer-facing businesses that will show resilience. He also expects AI capex growth to continue into 2027 and sees low job losses supporting consumer spending. He does not give a numeric index target.
“Rest of the year, think there's more upside for stocks. I think the drivers of this bull market are still intact.”at 29:56
CNBC Power Lunch: Investing Outside Big Tech, Oil Prices Rally, Powering AI Infrastructure 10/8/26 ·
AI infrastructure & data centers
Hyperscaler AI capex keeps growing into 2027, benefiting equipment suppliers.
Lefkowitz looks out to 2027 and expects continued growth in AI capital expenditure. He says this will be good news for the picks-and-shovels companies that sell equipment to hyperscalers. The view rests on hyperscaler spending plans rather than a specific figure.
“When we look at '27, I think you're going to see continued growth in AI CapEx, and that's going to be good news for the picks and shovels guys, people who sell equipment to those hyperscalers.”at 30:39
CNBC Power Lunch: Investing Outside Big Tech, Oil Prices Rally, Powering AI Infrastructure 10/8/26 ·
Fed can be patient and won't cut soon; oil-driven inflation isn't labor-driven.
Lefkowitz argues the Fed is still raising rates but with less urgency than in past tightening cycles. The Fed is worried about inflation from the oil shock, not from the labor market, unlike 2022 when wage growth was too high. Wages are growing around 3-3.5%, so the Fed can be patient and take its time without drastic action. He does not expect the Fed to cut initially, because it will want to see inflation wash through the system, including higher freight costs passed on in Q3 earnings.
“They're not worried about inflation coming from, say, the labor market. That's a very different situation than we were in 2022”at 31:45
CNBC Power Lunch: Investing Outside Big Tech, Oil Prices Rally, Powering AI Infrastructure 10/8/26 ·
Companies may pass 1-1.5% of higher transport costs to retail prices; consumers can tolerate it.
Lefkowitz expects higher transportation and freight costs to show up in Q3 earnings, with companies needing to raise retail prices by about 1%, perhaps 1.5%. He thinks the consumer can tolerate that, even though people are annoyed. He does not think this will crack the broader spending story, citing wages growing around 3-3.5%, which gives households some cushion.
“I think we're talking about companies may need to raise prices 1% at the retail level, maybe one and a half. Which the consumer can tolerate.”at 33:32
CNBC Power Lunch: Investing Outside Big Tech, Oil Prices Rally, Powering AI Infrastructure 10/8/26 ·
Beaten-up financials and industrials offer value, but need oil and rate pressure to ease first.
Lefkowitz says financials and industrials have been beaten up and represent the value in the market today. He says a true snapback in these areas requires some volatility to come out of the rates market and pressure to come off oil prices. The view is conditional on those macro conditions easing.
“we need to see some pressure come off the oil prices to see a true snapback in some of these areas that have gotten beaten up, but that's in our mind where the value is today.”at 33:58
CNBC Power Lunch: Investing Outside Big Tech, Oil Prices Rally, Powering AI Infrastructure 10/8/26 ·
Shows
- UBS On-Air · 1 episode
- CNBC Power Lunch · 1 episode
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