Investors Should ‘Consider Growth Beyond Tech’, Says UBS

US equities are approaching record highs, but UBS said investors should broaden their focus beyond the technology sector as the market rally heads into 2026. 

In its latest daily update note, UBS states that while tech remains a “key driver for the market’s next leg up,” the recent underperformance of the Nasdaq relative to the S&P 500 highlights “other compelling opportunities” across sectors.

UBS maintains a positive view on tech, arguing that the fundamentals behind the AI boom remain intact. 

It points to “genuine demand for AI-related products and services” and notes that monetisation trends look increasingly encouraging. 

The bank cites Salesforce’s latest update as evidence, saying its revenue outlook “exceeded analysts’ estimates, driven by increasing customer adoption of its AI tools.”

However, UBS argues that investors should also look to health care, where “greater clarity on drug pricing and pharma tariffs” is expected to support performance heading into 2026. 

The sector stands to benefit from the structural appeal of longevity, with UBS favouring exposure to obesity treatments, cancer therapies and fast-growing medical device segments, including robotic surgery and continuous glucose monitoring.

Meanwhile, utilities offer a strong combination of growth and resilience, UBS says, supported by rising capital spending tied to AI-related power demand and electrification. 

With the sector trading at a discount to the S&P 500 and offering a 2.7% dividend yield, UBS sees a “compelling combination of growth and defensive income potential.”

Banks, too, are well-positioned. UBS notes that they are now “well capitalized, profitable, and have less risky balance sheets,” with US bank return on equity rising to 11.4% in 2025. 

It expects deregulation, improving loan growth and strong capital markets activity to support further gains.

In a note earlier in the week, analysts at Goldman Sachs said they are also constructive on the outlook for the banking sector.  

UBS concludes that investors “underallocated” to equities should add exposure, with health care, utilities and banking set to “broaden the foundation for further gains” beyond tech.