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ELECTRONICS STEAL THE SPOTLIGHT IN AI'S BREAKOUT YEAR

In a year dominated by artificial intelligence headlines, it's not the usual suspects that are quietly outpacing the technology sector.

According to research from UBS HOLT (Hyperion Optimized Liquidity Tool), UBS's financial analysis system, the often-overlooked Electronics industry has emerged as 2025's top performer driven by its critical role in building the infrastructure behind AI.

UBS HOLT's accelerating revenue growth screen identifies several under-the-radar winners, including electronic equipment makers Amphenol APH.N, Corning GLW.N, and Jabil JBL.N, companies integral to the AI data center buildout.

"These companies possess operational and fundamental profiles that are just as compelling as those in other areas of Technology and are integral to the AI infrastructure buildout," writes UBS HOLT sector specialist John Talbott.

Companies in the electronics industry have operational and fundamental strengths comparable to other tech sectors, and they play a crucial role in building AI infrastructure, said Talbott.

UBS Global Research reveals these firms are forecast to reach all-time high cash flow returns on investment (CFROI) in 2025/2026, with analyst estimates and CFROI revisions trending upward.

Yet, "electronics still trades at the lowest HOLT Economic PE multiple in the sector and further has the least analyst coverage," the report notes, highlighting a potential blind spot in the market.

UBS Evidence Lab data supports the trend, showing a sharp increase in AI mentions and positive sentiment in electronics earnings calls.

Oracle ORCL.N stands out among software peers, with revenue projected to grow in the mid-teens this year, fueled by surging AI demand.

Despite concerns over heavy capital spending and margin pressure, "the stock can work as long as the growth/AI thesis plays out," said UBS Software Analyst Karl Keirstead in a note dated August 19.

(Akriti Shah)

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