Should You Invest Now? UBS Sees ~10% Earnings Growth, but Geopolitical Fear Is Testing Patience

The short answer: stay invested if your money has a multi-year horizon

Yes - but mainly for money you do not need within the next year or two.

The real choice is whether to keep exposure to the market or hand entry-point decisions to fear. That matters because the backdrop still looks steadier than the mood. Global stocks just came off a 20.2% return in 2025, and the S&P 500 was only about 1% below a record high. If you step aside during a scare like this, you may avoid a headline dip while increasing the risk of missing the recovery that follows.

The reason investors are second-guessing everything is clear. This week the S&P 500 declined 1.7% as anxiety rose over the war in the Middle East and Brent crude climbed toward USD 110/bbl. Higher oil can feed worries about inflation, slower growth, and tougher policy choices. Bears are right to flag that risk.

Why UBS remains constructive on global stocks

UBS's case is straightforward: equities can keep working if earnings continue to build and the policy backdrop does not get worse. Fear headlines matter, but the earnings base underneath them matters more.

Profit growth is the main support

UBS expects earnings growth for the MSCI AC World Index of around 10% both this year and next. In simple terms, the global equity market is still expected to generate more profit, not just trade on optimism. When investors are worried, they usually demand a larger risk discount. But if earnings are still growing at roughly 10%, markets do not need a major valuation stretch to produce reasonable returns.

That is why this setup matters now. A 10% earnings-growth path is strong enough to support the market, but not so aggressive that it assumes everything goes perfectly.

The macro backdrop still points to a soft landing

UBS still sees economic growth of 1.7% this year, only fractionally slower than a projected 1.9% for 2025. It also sees conditions that could support consumer spending and a cyclical upswing in parts of Europe.

That matters because a hard slowdown would pressure businesses and profits. A softer landing, by contrast, suggests growth is cooling without breaking. For investors, that is the more constructive setup: demand can hold up better and companies have a better chance of preserving profitability.

AI matters only if it shows up in earnings

UBS also expects capital spending on AI and broadening adoption of the technology to add impetus behind profits. That is a more concrete way to frame the theme.

The first stage is the buildout - data centers, chips, networking, and power infrastructure. The second stage is adoption, as more companies use the technology to improve productivity or cut waste. If that adoption broadens, AI can start supporting earnings beyond a small group of leaders. If it does not, the theme may stay narrower and more speculative.

What could change the view

UBS's base case is still constructive for 2026, including a fourth year of double-digit returns for global stocks in 2026. But that case is not immune to shock.

The main watchpoint is whether geopolitics and oil start to crack the earnings and growth assumptions underneath it. If the shock remains contained, UBS sees staying invested as the better discipline. If the macro backdrop or profit outlook deteriorates more materially, the argument becomes easier to question.