Bloomberg Surveillance Sep 21, 2026
With Ulrike Hoffmann-Burchardi, CIO Americas and Global Head of Equities at UBS Global Wealth Management
AI capital spending is running at 2.5% of US GDP and goes to $1.2 trillion globally next year, on Ulrike Hoffmann-Burchardi's numbers.
The argument on the desk this month is whether a Federal Reserve that is still raising rates ends the equity rally. Hoffmann-Burchardi said the binding constraint is not the cost of money at all. It is electricity, permits and people.
"We in CIO foresee about 100 gigawatt of shortage just in electricity in the U.S. by 2030."
Hoffmann-Burchardi, CIO Americas and Global Head of Equities at UBS Global Wealth Management, on Bloomberg Surveillance, had come back from a week in Silicon Valley the day before and said what surprised her there was robotics, not chatbots.
The full segment is covered here so you can skip it.
Here are the 6 calls that matter.
Key Takeaways
Three spenders are carrying growth at once — governments, companies and households
The US, China, Germany and Japan are all in fiscal stimulus mode at the same time
50bps of hikes, or even 75bps, would not end the equity rally, because the rate of change is nothing like 1999
The next constraint on AI spending is physical, not financial — power, permits and people rather than capital
UBS's investment office sees a 100GW electricity shortfall in the US by 2030
Robotics is the surprise from her Silicon Valley week, and it is another source of demand for semiconductors and the equipment that makes them
What AI coding did to software, agents could do to the internet — which makes the digital incumbents the ones at risk
The large caps that led the last decade are not her candidates for the next one
She would rather hold an equal-weighted index than a market-cap one
"Atoms over bits" — the physical economy is the more AI-resistant place to be in the short term
1. Three Spenders At Once
Jonathan Ferro opened by reading back her own note: equities have more runway, but less room for error. Asked why she is constructive on broader leadership, Hoffmann-Burchardi did not start with the Fed. She started with who is writing checks.
Governments, companies and consumers are all spending at the same time
We see strong economic growth ahead. Governments are spending, corporates are spending, and the consumer is spending.
Ulrike Hoffmann-Burchardi
She named the four economies doing it together, the US, China, Germany and Japan, then put a number on the corporate half.
AI capital spending is 2.5% of US GDP and rising
We have AI capex now at 2.5% of U.S. GDP. We see it going higher globally to 1.2 trillion next year.
Ulrike Hoffmann-Burchardi
On the household half she pointed at the retail sales print rather than at sentiment.
Retail spending rose again, and by more on the control group
We saw retail spending up again month over month and even higher when you take out or just focus on the control group.
Ulrike Hoffmann-Burchardi
Her conclusion from the three: growth drives equities more than rates do.
2. Hikes Are Not The Risk
Ferro put it to her directly — a rate hike, then, is not a headwind. Hoffmann-Burchardi did not deny the headwind. She said the speed of it is what decides whether it matters, and compared this cycle with the one investors of a certain age remember.
It is the rate of change, not the level, and this is no 1999
There are headwinds, but it's the rate of change that matters. We see one more hike ahead, it may be more, but certainly we haven't seen yet a cycle that is akin to 99, right? We saw 1.75% in less than a year.
Ulrike Hoffmann-Burchardi
Ferro then quoted Austan Goolsbee, the Chicago Fed president, who had said on air earlier that morning that this would not be painless, and asked where the pain shows up if not in her forecast.
Another 50bps to 75bps does not end the rally
So we think these rate hikes are not going to take off from the equity rally. We think that the equity market and growth is going to be so resilient that 50 basis points or maybe even 75 are not going to derail.
Ulrike Hoffmann-Burchardi
Ferro pushed back with the market's own evidence: it is not showing up in small caps and it is not showing up in consumer discretionary at the sector level. Hoffmann-Burchardi conceded the watch item. The lower-income consumer, with rates where they are and diesel where it is, is the one she would follow, and she said it is not yet enough to change the aggregate picture.
3. AI Moves Into Atoms
Ferro said the New York conversation of the past week had been about the potential end of humanity, and asked what the West Coast conversation was instead. Hoffmann-Burchardi's answer was that the spending conviction out there is, if anything, still underestimated, and that the newest part of it is not software.
A week in Silicon Valley changed what she watches
I just spent last week in Silicon Valley.
Ulrike Hoffmann-Burchardi
The surprise was how fast AI is reaching the physical world
But now we also see massive progress in robotics. And that is yet another source of demand for semi-cap and semis more broadly.
Ulrike Hoffmann-Burchardi
Asked to build the case out, she started from the science. Problems unsolved for over 200 years are being solved in a matter of hours, she said, with more to come in math and biochemistry, and the return on that is large enough that slowing the spending is hard to imagine. Robotics extends the same logic.
Humanoids are a return-on-investment argument, not a science-fiction one
And then as we go to robotics, when we have now humanoids that are going to be able to do many more tasks, much more cheaply, those are all very, very strong ROI propositions.
Ulrike Hoffmann-Burchardi
So demand is not the question she is asking. Bottlenecks are.
4. Power, Not Politics
Ferro asked whether the bottleneck is politics. Annmarie Hordern extended it: does the government start slowing these companies down? Hoffmann-Burchardi said permitting has already become an issue, and that it cuts across both parties.
Permits are being held up on more than 200 data center projects
We have about 200 plus now data center projects permit being delayed.
Ulrike Hoffmann-Burchardi
She expects that to ease once the midterms are past, which is why she does not rank it first. The constraint she ranks first is the grid.
The shortage she is watching is 100 gigawatts of electricity
We in CIO foresee about 100 gigawatt of shortage just in electricity in the U.S. by 2030.
Ulrike Hoffmann-Burchardi
Physical limits bind before political ones do
I think the most likely thing is probably physical constraints such as power.
Ulrike Hoffmann-Burchardi
Capital is on her list of possible bottlenecks too, though she said it is unlikely at these levels of rates, and so are people: the physical world cannot move exponentially the way AI can.
5. Incumbents Get Disrupted
Hordern turned to energy costs. Seven months into the war, she said, oil has stayed elevated rather than spiked, and asked what that plus rate hikes does to smaller consumer-facing companies. Hoffmann-Burchardi allowed the point at the company level.
Leveraged small companies can be squeezed
I'm not saying there couldn't be some stress on these smaller companies, especially those that are leveraged for sure.
Ulrike Hoffmann-Burchardi
Her answer at the index level is that aggregate demand is strong enough to carry them, and that the benefits of AI reach every part of the economy rather than one corner of it. Then she added the part of her view she said separates her from other strategists, and it runs the opposite way to the usual one.
What coding did to software, agents could do to the internet
I think that's where we maybe differ from others, because if you think about what already AI coding has done to software, we think something similar could happen with agents to the internet.
Ulrike Hoffmann-Burchardi
The companies exposed to that, on her reading, are the ones that already won the internet.
The last decade's winners are not her pick for the next one
So, again, these large cap names that have dominated the markets for so long, in our view, are not necessarily the winners for the next decade.
Ulrike Hoffmann-Burchardi
6. Atoms Over Bits
Ferro said she cannot discuss single names, but that listeners were already filling in the Magnificent Seven for themselves, and asked how she manages that risk. Her answer was a preference stated in four words.
Own the physical economy over the digital one
We think you should be invested in atoms over bits. So more the physical economy than the digital economy.
Ulrike Hoffmann-Burchardi
The reason, she said, is that the physical economy is the more resilient of the two to AI in the short term, and that every previous technology wave produced new market leadership rather than entrenching the old.
Asked whether that means moving away from a market-cap index approach, she said she would take an equal-weighted index over the S&P 500's own weights, and that she does not want the position to be purely defensive. UBS runs three thematic portfolios she named: AI, electrification and longevity.
The point of the themes is diversification inside the bet
So we want to be invested in the largest, biggest structural opportunities over the next decade, but we want to be diversified in those.
Ulrike Hoffmann-Burchardi
That diversification runs across geographies, sectors and structures, she said, which is what lets her hold both sides at once.
Offense and defense in the same allocation
So it's about playing offense and defense for us.
Ulrike Hoffmann-Burchardi
Bonus Insights
The rest of the hour
Hoffmann-Burchardi took the opening segment of this edition of Bloomberg Surveillance TV. The same hour carried Bob McNally of Rapidan Energy Group on what a US diesel export ban would do to pump prices, and Baiba Braze, Latvia's foreign minister, on Russian sabotage and drone incursions in Europe.
Hoffmann-Burchardi's bottom line is that the equity rally survives another 50 to 75 basis points of Fed tightening because three sources of spending are running at once, and that the risk worth repositioning for is not monetary but structural: the grid runs short before the money does, and the companies that dominated the index through the software decade are the ones AI agents are most likely to take apart.
Products, Companies & Tools Mentioned
UBS (Her firm. Its Chief Investment Office produced the AI capex figures, the 100 gigawatt electricity shortfall estimate and the three thematic portfolios — AI, electrification and longevity)
The Magnificent Seven (The group Ferro said listeners were picturing when she said new leadership; she does not discuss single names on air)
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