HSBC sees global and US equities supported by strong earnings momentum linked to AI adoption, fiscal spending and a positive cyclical backdrop. The bank argues the recent tech sell-off has improved valuations and favours a broad sector allocation across IT, Communications, Financials, Industrials, Materials and Utilities, with particular emphasis on US and Asian markets for diversification and innovation exposure.
AI trend broadens sector opportunities
“Despite the recent tech sell-off, US earnings growth remained strong in Q4 2025, reflecting continued AI adoption, software demand and margin expansion. We expect this momentum to persist, led by the technology and cyclical sectors. Tech valuations are also much cheaper now.”
“The cyclical outlook also appears positive, thanks to the AI trend, elevated investment spending and fiscal support. This broadens the opportunity set in the industrials sector, which continues to benefit from fiscal spending and capital investment, with positive spillover effects on materials linked to infrastructure construction.”
“Utilities have also benefitted from increasing demand for electricity – not just in the US but also in Asia and parts of Europe. Our selective yet broad-based approach helps reduce concentration risk in the US and the technology sector.”
“We remain overweight on global and US equities across IT, Communications, Financials, Industrials, Materials and Utilities. In response to rising risks to oil supply from geopolitical tensions in the Middle East, we’ve upgraded global energy stocks to neutral.”
“Geographically, we continue to favour the US, while increasingly adding to Asia, which provides stock level diversification at compelling valuations, along and a vibrant innovation ecosystem. Some emerging markets have also outperformed as investors look to reduce their US exposure.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Read the full article here
