UBS' Fowler Says Parts of Nasdaq Look 'Outright Cheap'

Summary

UBS strategist Gerry Fowler argues markets are in an unprecedented growth era driven by top-line sales growth and margin expansion. He says parts of the Nasdaq look outright cheap, views the summer de-risking in tech and AI trades as over, and expects investors to lean back into those trades as volatility drops. He also dismisses capex fears, pointing to a $2.4 trillion cloud revenue backlog that should support cloud sales growth.

• Fowler sees an unprecedented earnings and growth era in the US and Europe.
• Parts of the Nasdaq that have not yet hit highs are described as outright cheap on sales growth.
• Summer de-risking in Nasdaq tech, Korea AI trades, and winner names appears over.
• Single-stock volatility fell from above 50% to the mid-30s, allowing more leverage.
• Fowler expects investors returning from holiday to lean back into tech and AI trades.
• Fowler rejects the view that AI capex is excessive and cites CapEx rising to $650 billion.
• Cloud revenue backlog rose by $1 trillion to $2.4 trillion, equal to 100% of existing cloud revenue.
• Cloud revenue growth is seen as priced more cheaply than at any time since 2011.