Speaker · Updated
Jason Draho: latest market views
UBS Global Wealth Management
Summary
Jason Draho, PhD, is Head of Asset Allocation Americas in the UBS Chief Investment Office and chair of the US Investment Strategy Committee, a former Morgan Stanley global cross-asset strategist who oversees tactical and strategic allocation recommendations for UBS's US wealth clients.
Chorus has 50 views from Jason Draho across 4 episodes on UBS On-Air since October 12, 2026. Their latest calls: bullish on Alphabet, Amazon.com, Meta Platforms and Microsoft.
Where they stand
Their latest bullish or bearish call on each company.
- AlphabetBullish ·
- Amazon.comBullish ·
- Meta PlatformsBullish ·
- MicrosoftBullish ·
What they talk about most
- US growth & recession risk · 6
- Earnings & corporate profits · 5
- AI infrastructure & data centers · 4
- US inflation · 4
- US rates & the Fed · 4
- US stock market outlook · 4
- Market sentiment, positioning & volatility · 3
- US Treasuries & yields · 3
- AI chips & semiconductors · 2
- Oil & fuels · 2
- Alphabet · 1
- Amazon.com · 1
The latest views
Newest first. Every quote is checked against the episode's transcript.
Market sentiment, positioning & volatility
Recent equity rotation is positional, not de-risking; investors remain long equity exposure this time.
Last week the S&P 500 fell 0.5% and the Nasdaq fell 0.8% while the Russell 2000 rose 2%. Defensive stocks have outperformed cyclicals by about 20 percentage points over recent months, and AI beneficiaries were hit hardest, with some of their early-year outperformance fully retraced to roughly flat for the year. The surface looks calm but churn underneath is large. Jason reads this as positional rotation rather than net de-risking. In the summer selloff investors were relatively long equity exposure and derisked, whereas now that has not happened to the same degree.
“But really what it looks like is more of a positional rotation rather than net [risk], sort of derisking in equities. Unlike in the summer when there was that sort of derisking going on, investors were kind of relatively long exposure to equity markets.”at 3:11
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
Meta PlatformsBullish
Meta's AI capex plans unlikely to change despite higher borrowing costs, given its balance sheet.
Meta is one of four hyperscalers that together account directly or indirectly for about 75% of expected AI-related capex this year and next. These firms have, on average, AA credit ratings, market caps above $3 trillion, diversified businesses, long profitability track records and balance sheets that can take on much more debt. Their returns on capital are above 25%. A rise of one or two percentage points in borrowing costs would raise the price of funding but is unlikely to materially change how much they spend.
“These are companies that have, on average, AA credit ratings, market caps over $3,000,000,000,000 diversified businesses, long track records of profitability, and really balance sheets that can take on a lot more debt at this point in time.”at 7:26
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
AlphabetBullish
Alphabet's AI capex plans unlikely to change despite higher borrowing costs, given its balance sheet.
Alphabet is one of four hyperscalers that together account directly or indirectly for about 75% of expected AI-related capex this year and next. These firms have, on average, AA credit ratings, market caps above $3 trillion, diversified businesses, long profitability track records and balance sheets that can take on much more debt. Their returns on capital are above 25%. A rise of one or two percentage points in borrowing costs would raise the price of funding but is unlikely to materially change how much they spend.
“These are companies that have, on average, AA credit ratings, market caps over $3,000,000,000,000 diversified businesses, long track records of profitability, and really balance sheets that can take on a lot more debt at this point in time.”at 7:26
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
Amazon.comBullish
Amazon's AI capex plans unlikely to change despite higher borrowing costs, given its balance sheet.
Amazon is one of four hyperscalers that together account directly or indirectly for about 75% of expected AI-related capex this year and next. These firms have, on average, AA credit ratings, market caps above $3 trillion, diversified businesses, long profitability track records and balance sheets that can take on much more debt. Their returns on capital are above 25%. A rise of one or two percentage points in borrowing costs would raise the price of funding but is unlikely to materially change how much they spend.
“These are companies that have, on average, AA credit ratings, market caps over $3,000,000,000,000 diversified businesses, long track records of profitability, and really balance sheets that can take on a lot more debt at this point in time.”at 7:26
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
MicrosoftBullish
Microsoft's AI capex plans unlikely to change despite higher borrowing costs, given its balance sheet.
Microsoft is one of four hyperscalers that together account directly or indirectly for about 75% of expected AI-related capex this year and next. These firms have, on average, AA credit ratings, market caps above $3 trillion, diversified businesses, long profitability track records and balance sheets that can take on much more debt. Their returns on capital are above 25%. A rise of one or two percentage points in borrowing costs would raise the price of funding but is unlikely to materially change how much they spend.
“These are companies that have, on average, AA credit ratings, market caps over $3,000,000,000,000 diversified businesses, long track records of profitability, and really balance sheets that can take on a lot more debt at this point in time.”at 7:26
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
Markets are separating AI-linked borrowers by quality; lower-tier unsecured issuers face widening spreads.
Markets are focused on rising spreads and default risk, especially for some neoclouds and other lower-rated AI infrastructure participants that lack the credit quality, capital structure, scale and profitability of hyperscalers. Investors are discriminating between quality tiers. Lower-quality issuers using unsecured debt not backed by data centers or chips have seen the biggest price declines. Loans secured by chips and lease payments from higher-quality hyperscalers have been far less affected.
“What we've seen in the past couple weeks is the markets are really focused on these rising spreads and default risk of some of these, especially some of the neo clouds”at 8:29
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
AI infrastructure & data centers
Higher borrowing costs will change how AI buildout is financed, not materially cut its volume.
Higher borrowing costs are likely to derail the AI build-out over time for weaker players, but the main effect will be on how it is financed, requiring more secured financing and backstops or contractual support from higher-quality issuers to the wider ecosystem. The build-out already intended should not be significantly constrained. AI investment will continue and earnings flowing through the ecosystem should continue. Concerns about financing costs should abate, as concerns about AI monetisation did after DeepSeek's release, when markets became comfortable it would not disrupt the AI trade.
“So it's more of how the money is raised and who is providing the capital as opposed to significant contraction of available capital that actually outright constrains the build out that's already intended.”at 9:29
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
US Q3 GDP likely 3–3.5%, strong momentum; moderation to 2.5% would still be solid.
Q3 US GDP is likely to land between 3% and 3.5%, very strong growth that gives good momentum into Q4. Jason expects some moderation, but he sees roughly 2% as the trend level, so even a slowdown to 2.5% would be a solid number. This resilient growth is a key pillar of his macro view that fundamentals remain solid.
“It's likely to be somewhere between 3%, 3.5, so very strong kind of growth numbers, good momentum going into Q4.”at 14:37
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
Underlying US inflation still disinflating gradually; core PCE is the outlier and should clarify soon.
Most underlying inflation trends still point to disinflation, though at a gradual pace. Core PCE is the one component that matters most for the Fed and is the outlier, running higher. Many other inflation components look much lower and more contained. Jason expects this divergence to become clear in the coming months, which he thinks will allow the Fed to hike in December and March and then pause.
“Underlying inflation trends still point to disinflation, maybe at a gradual pace.”at 14:54
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
Fed holds this week but hikes in December and March, then pauses; markets price out cuts.
Market pricing shows less than a 10% chance of a hike this week, but about a 90% chance of one full hike by December and roughly 1.85 hikes by March. Jason expects no move this week. Hikes in September were justified by inflation falling too slowly, and the September inflation print came in higher than expected. That makes a pause a mixed message, so the December meeting is very much live. Jason expects hikes in December and March, then a pause, and markets pricing out cuts beyond that horizon. He flags that Chair Warsh's press conference could be challenging, since emphasising the trend over a single data point could be read as either reassurance or a sign that more work remains.
“And that will allow the Fed to hike in December and March but kind of pause thereafter.”at 15:16
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
Q3 earnings growth tracking near 27%, with a slight beat likely; nearly 80% of companies beating.
So far in Q3 nearly 80% of companies have beaten earnings expectations, which Jason calls very strong results. Most of the reporting is concentrated in the coming week. UBS's expectation of 27% Q3 earnings growth is very much on track, and he expects a slight additional beat when reporting is complete. He ties this to resilient growth and solid corporate earnings, which underpin his constructive equity view.
“And our expectation of earnings growth of 27% in Q3 is very much on track. There'll probably be even a slight beat to that when it's all said and done.”at 15:37
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
Equities remain attractive on solid growth, earnings and continued AI investment over six to twelve months.
UBS's house view on a six-to-twelve-month horizon did not change much despite higher investor concern about AI capex spending. The macro fundamentals behind the market outlook remain solid: Q3 US GDP is strong, underlying inflation is disinflating gradually, nearly 80% of companies are beating earnings expectations, and Q3 earnings growth is tracking about 27%. AI investment will continue. Together these make the backdrop favorable for equities, which UBS continues to find attractive.
“So that is kind of favorable for equities while we continue to find them attractive.”at 15:57
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
Favors higher-quality semiconductor and hardware companies that benefit directly from AI infrastructure spending.
UBS's equity team takes a barbell approach to technology. One side favors higher-quality semiconductor and hardware companies that can benefit directly from AI infrastructure spending. This sits alongside a defensive side of mega-cap platforms and defensive tech. Semis sold off sharply in the summer deleveraging, but the core view is that direct beneficiaries of the AI build-out remain the preferred exposure while capex continues.
“On the one hand favoring higher quality semis and hardware companies that can stand to benefit directly from AI infrastructure spending.”at 16:13
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
Big Tech platforms & digital ads
Mega-cap tech platforms and defensive tech should be resilient through volatile periods as AI capex plays out.
Within UBS's barbell approach to tech, the other side is mega-cap tech platforms and more defensive tech companies. Jason expects these to be resilient during volatile periods as the AI capex boom plays out. This complements the preference for direct AI infrastructure beneficiaries, giving a mix of exposures that can hold up if AI-related sentiment remains choppy.
“But then on the other side is the mega cap tech platforms and the more defensive tech companies that could be resilient during these volatile periods as the AI CapEx boom plays out.”at 16:21
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
10-year Treasury yield seen at 4.9% by year-end, with a possible rise to 5–5.3%; keep duration short.
Last week's yield decline reflected growth concerns about AI capex, not better inflation, so the Fed may not need to hike as much. A systematic, rules-based short squeeze exacerbated the drop. Jason thinks that positioning adjustment is largely done unless fundamentals drive another big move lower. His 4.9% year-end forecast for the 10-year sits at the lower end of the range, and yields could easily climb back to 5% to 5.3% in coming weeks depending on macro data. He stays cautious on extending duration and prefers the intermediate part of the curve, while noting bonds still diversify equities.
“So what that means is when we think about the ten year, our forecast for year end is 4.9%.”at 17:13
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - An assessment of recent market pricing ·
Hotter-than-expected CPI shows disinflation is slower than the Fed wants; AI demand adds to core goods.
September CPI rose 33 bps month over month versus about 25 bps expected. Energy, driven by higher oil prices, was the main driver of the headline acceleration. Core goods inflation reaccelerated on firmer vehicle sales and costs, and signs that AI-related demand is acting as a demand-side inflationary force. Core services also strengthened, led by travel categories, with airfares elevated partly because oil is higher. He calls the data 'not terrible' overall, but the pace of disinflation is not where he or the Fed would like.
“it did surprise to the upside. It was at 33 basis points month over month. Expectations around 25 basis points... But again, the pace of disinflation, not necessarily where I think we would like or the Fed would like to see it.”at 1:39
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
US economic activity remains healthy, with no sign of a surge above trend despite mixed data.
Core retail sales rose only 10 bps since September, below expectations and below August's strong figure, though seasonality around Labor Day and holidays affects timing. Regional and state manufacturing indices were mixed. Taken together, the data show healthy activity without an above-trend surge. He argues month-to-month data is volatile and revised, so a three-month trend is more useful. Overall he calls the data 'okay, but not spectacular'.
“the pace of economic activity in The US remains healthy, but there's no signs of surge above sort of above trend.”at 3:08
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
AI infrastructure & data centers
AI added roughly 0.6 to 1 point to H1 US GDP growth; an AI investment slowdown would hit US growth.
AI has been a very significant driver of US GDP growth. He estimates 60 bps to 1 percentage point of the 2.4% H1 growth could be traced to AI, through investment spending and the wealth effect from higher AI stock prices. If funding concerns curtail AI investment, the US economy would be affected, a 'mini AI slowdown' that would slow growth and show up in rates.
“AI has been a very significant driver of US GDP growth. In the first half of the year... you can estimate anywhere from 60 basis points to a one full percentage point of U. S. Growth that was 2.4% could be traced to AI”at 4:05
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
Fed will hike gradually, about one hike per quarter, letting rates drift lower.
Fed guidance has been clear that it wants a gradual pace, roughly one hike per quarter, with September and December as the expected meetings. The dot plot indicates more hikes are coming, and the CPI data validated his view. The Fed chair's IMF remarks suggested the world has broadly conformed to the September expectations, implying the Fed can keep a measured pace. The committee has hawks and doves, and a gradual pace balances them. A more gradual path gives inflation more time to improve, which could eventually allow the Fed to pause entirely, and this is part of why rates have eased.
“Fed guidance has been pretty clear that they want to take them kind of a gradual pace, let's say one hike per quarter, September, December, we think.”at 4:55
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
AI infrastructure & data centers
Neocloud and data center debt spreads widened about 80bps; funding strain could curb AI investment.
Credit spreads for neocloud and data center debt issuers rose about 80 bps over the past four or five months, from roughly 120 bps to over 200 bps, with variation between issuers. This reflects doubts about whether these issuers will generate enough revenue to cover their costs. The concern is that higher funding costs could curtail AI investment and hit the broader economy.
“And then you see stress on the credit side where you've seen credit spreads for some of the debt issuers, particularly kind of neo cloud issuers, data centers rising over the course of the past four or five months, 80 basis points.”at 8:26
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
Market is reassessing memory margins, citing capacity scarcity and Chinese competition.
The sell-off in AI-linked names reflects investors reassessing the durability of supply chain margins, memory capacity scarcity, and competition from China. A Chinese company recently announced a breakthrough it claimed would produce better memory chips. Korean memory stocks were hit hard as a result. The broader concern is whether the growth in AI spending can justify its return on capital.
“investors, the market is kind of reassessing the durability of the supply chain margins, memory capacity, scarcity, competition from China.”at 9:00
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
Rising 10-year yields reflect stronger real growth, not inflation expectations; curve not signaling recession.
The 10-year yield is up about 100 bps this year, with over 90% of that from higher real rates. Inflation expectations have been range-bound. Fed funds expectations for December rose about 100 bps, consistent with solid nominal GDP growth near 6%, not slowing growth. The 2s10s curve remains positive, about 35 bps, so there is no recession signal, and it has not steepened, so the market is not saying the Fed is behind the curve. The 10-year peaked near 5.3-5.4% and has drifted lower; he sees about 5.2% as a baseline until macro conditions change. Investors were very short, so buyers may step in, and he recommended extending duration a bit further out the curve.
“Very simply, if you look at the ten year treasury yield, it's up about 100 basis points this year. 90 plus percent of that is due to higher real rates. Inflation expectations have not risen much at all.”at 10:26
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
US housing and real estate are very soft, hit by higher interest rates.
Parts of the economy sensitive to interest rates have been affected by higher rates, unlike AI investment, which has been relatively immune. The housing market and real estate are very soft, and he says that is clearly tied to higher rates. Equity markets are only 2% from their highs, but about half of the S&P 100 companies are down more than 20% from their highs earlier in the year, showing that rate-sensitive pockets are struggling.
“other parts of the economy that are impacted by interest rates have been affected. The housing market and real estate, very soft and that's clearly gonna be tied to it.”at 12:12
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
Household wealth and balance sheets are strong enough to keep supporting consumer spending.
Household wealth is quite strong and household financial balance sheets are in good shape, which supports consumer spending. This cushions the economy against higher rates, even though the rate-sensitive parts of the economy are struggling. He also points to the AI-driven wealth effect as part of the supportive backdrop.
“Household wealth in general is quite strong and household financial balance sheets are in good shape. That's supporting consumer spending.”at 12:56
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
Large deficits and this year's fiscal impulse support growth that is less sensitive to rates.
He lists large deficits alongside AI capex and household wealth as key structural drivers of growth that are not particularly rate-sensitive. The fiscal impulse this year is a support for the economy, which helps explain why rates have risen on growth rather than falling on a slowdown.
“And then you also have just kind of large deficits. We had fiscal impulse this year that supports it.”at 12:56
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
AI investment story still intact; not negative on AI, though spending growth may moderate.
The AI investment story still looks very much intact for now, and he is not negative on AI. The debate is about future growth rates: whether CapEx growth decelerates from about 80% toward 40%, rather than a collapse. Who captures AI's gains remains an open question, which drives churn among AI-linked stocks. The market is testing where the vulnerabilities are, and the expected result is some moderation of the pace of growth.
“The AI investment story still looks very much intact for the time being... not again, negative on AI, but it may be like some moderation of this pace of growth.”at 13:56
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
Oil has been moving the wrong way, lifting inflation; expected to fall over the next year.
Oil is one of the three key drivers of markets alongside AI and rates. Over the past few weeks oil has been rising and working in the wrong direction, feeding into headline inflation through energy prices and travel costs. Rates and oil are the two factors that have taken a ding. He describes a base case that rates and oil start to decline over the next year, which would align the factors and give markets more support to move materially higher.
“oil certainly been working in the wrong direction. ... If those other two factors, rates and oil start to decline, which is our kind of base case for the next year”at 14:49
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
Still constructive on equities with strong earnings growth; material upside needs rates and oil to fall.
He remains constructive on equities and still sees strong earnings growth, while advising investors to diversify and avoid being overly concentrated. Markets are currently chopping in a tight range because AI is strong but rates and oil are headwinds. If rates and oil decline, which is his base case for next year, the markets could move materially higher. Until then, he expects choppy trading, with clarity on the midterms and the Middle East as possible catalysts.
“All that said, still constructive on equities, still see strong earnings growth, continue to sort of message to diversify kind of across the board, not to be kind of overly concentrated”at 15:14
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
Commodities and gold diversify portfolios against stagflationary growth scenarios.
In his portfolio positioning, he suggests looking for diversifiers such as commodities or gold, which provide some protection in scenarios of more stagflationary growth. This is a brief positioning suggestion, with limited supporting detail beyond the stagflation hedge logic.
“commodities or or gold, you know, provides some diversification against scenarios of kind of call call... Look. More stagflationary growth, you know, things of that sort.”at 15:41
UBS On-Air: Top of the Morning: CIO Strategy Snapshot - Sustainability of the AI trade ·
Constructive on US economy through end of 2027; growth resilient with Q3 GDP tracking around 3%.
Jason is constructive on the US economy over the next twelve months and through the end of 2027. Growth has been resilient despite many flagged risks, and the latest data look even stronger: retail sales were strong in August, Q3 GDP was tracking about 3%, and the labour market has re-accelerated. Capex is at a level not seen since the 1990s, and he sees a 'roaring 20s' type of scenario with a couple more years of very strong growth. He thinks the 1990s, not the 1970s, is the better parallel for stagflation worries, and that this has been accurate so far.
“Constructive certainly on The US economy, let's call it the next twelve months, but even like through the end of twenty twenty seven,”at 5:35
UBS On-Air: How should I be positioned? with Steve Chiavarone (Federated Hermes) and Jason Draho (UBS CIO) ·
20 older views from Jason Draho are on the episode pages, and all of them are a question away in your AI with Chorus.
Shows
- UBS On-Air · 4 episodes
Ask your AI what Jason Draho thinks
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