UBS Releases 13 TMT "Highest Conviction" Stock Picks
N.R. Finch
UBS issued buy ratings on 13 U.S. tech, media, and telecom stocks in a single report, betting on AI, cloud, and digital transformation. The through-line: undervalued names riding long-term structural growth — a signal that UBS sees the market mispricing this group.
What ties these 13 picks together?
Every name shares three traits: a unique growth driver, attractive valuation, and exposure to long-term structural trends like AI and cloud computing.
The report, co-authored by analysts Timothy Arcuri, Karl Keirstead, and others, uses pricing as of June 5 and rates all 13 as buy.
This means → UBS is not making a broad sector call. It picked one "best risk-reward" name from each TMT sub-sector and concentrated its bets.
Which stock has the highest implied upside?
Accenture tops the list on risk-reward, with a $320 price target implying roughly 80% upside.
The stock trades at about 12× earnings, well below UBS's 19.5× target multiple. In plain terms = the market has marked Accenture down by nearly 40%; UBS says the discount is sentiment-driven, not fundamental.
Analyst Kevin McVeigh sees generative-AI consulting adding 250–300 basis points of incremental growth per year.
Which large-caps does UBS favor most?
Amazon is the top large-cap internet pick at $333. The core thesis: the market underestimates AWS profitability.
UBS forecasts AWS revenue growth of 36% in 2026, above the Street's 30%, and its 2027 operating-profit estimate runs 40% above consensus.
Palantir is the top large-cap software pick at $200, with ~48% upside. UBS calls it "the intersection of AI and data — the two strongest spending trends," projecting 77% revenue growth in 2026.
This means → UBS sees cloud infrastructure and data as the two highest-conviction AI investment lanes, with Amazon and Palantir holding the key positions in each.
What about semiconductors and hardware?
Applied Materials is the top semiconductor-equipment pick at $570.
The thesis: a "DRAM-driven WFE super-cycle." UBS projects global WFE — wafer fabrication equipment — spending will hit $198 billion in 2027, up roughly 35% year-over-year.
In plain terms = AI demands massive amounts of memory chips (DRAM). Building those chips requires equipment first. Applied Materials is the leading equipment supplier, so orders reach it before almost anyone else.
What logic drives the remaining picks?
Spotify ($735): top media pick. Subscriber growth plus price hikes drive 14% CAGR in revenue; its 27× forward EBITDA sits one standard deviation below the three-year average.
AT&T ($31): top telecom pick. Wireless and fiber broadband subscriber gains plus low churn push 2027–28 free-cash-flow estimates 2–4% above consensus. Mastercard ($640): top payments pick. New payment flows — P2P, B2B — support growth; UBS argues the stock already over-discounts headwinds.
American Tower ($248): top tower/infrastructure pick, with U.S. organic revenue returning to mid-single-digit growth by 2027 plus double-digit growth at CoreSite data centers. Pinterest ($30): top small/mid-cap internet pick, leveraging purchase-intent data (Taste Graph) to lift advertiser ROI.
Procore ($68): top enterprise-app pick, betting on a non-residential construction spending recovery. Okta ($150): top cybersecurity pick, with upside from early "agentic identity" — authenticating AI agents — deployments not yet priced in. Nutanix ($62): top infrastructure-software pick; the VMware migration tailwind is underestimated, with the multi-year cycle only about 20% complete. TD Synnex ($310): top equipment pick, with its Hyve business expanding at a 35% CAGR, though implied upside is the list's lowest at roughly 15%.
What risk worries UBS the most?
The overarching debate across sub-sectors is "AI disruption risk" — whether SaaS companies will be cannibalized by AI-native vendors and large-model providers.
UBS's verdict: infrastructure and data-layer software are relatively more defensible; SaaS application-layer names face the highest substitution risk.
This reflects an unspoken thread in UBS's stock selection: among the 13 picks, infrastructure-leaning names (AWS, Applied Materials, American Tower, Nutanix) clearly outnumber pure application-layer plays — a sign that on the question of "who benefits from AI first," UBS is siding with the picks-and-shovels sellers.
Content is for reference only, not financial advice.