Swiss banking giant UBS (UBS) now expects the MSCI (MSCI) AC World Index to climb to 1,090 by the end of 2026, which would be an 11% increase from current levels. The bank sees artificial intelligence as the main reason for this outlook, with strategist Andrew Garthwaite calling generative AI “the steam engine of the mind.” UBS believes that AI is likely to create a bigger productivity boost than the late-1990s tech boom. At the same time, the bank notes that several conditions for a market bubble are starting to appear, though it says a full bubble has not formed yet.
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Interestingly, Garthwaite estimates that there is at least a 35% chance that a true bubble could develop because AI adoption is happening faster than almost any technology in history. UBS also points to several factors that are supporting stocks, including steady U.S. wage growth, the strong performance of AI-related sectors, and how markets typically behave after narrowly avoiding bear territory. Historically, equity markets have risen an average of 43% in the two years following a near-miss bear market, compared with the 34.6% increase seen so far.
As a result, UBS expects U.S. markets—including the Nasdaq (QQQ), S&P 500 (SPY), and Dow Jones (DIA)—to outperform the rest of the world. Garthwaite explained that U.S. stocks usually benefit the most in the early stages of a bubble, especially since AI added an estimated 63 basis points to U.S. GDP in the first half of 2025. In addition, UBS projects U.S. earnings per share to grow by 14% in 2026 due to faster AI adoption compared to other countries. The bank also raised its global GDP forecasts to 3.3% for 2025 and 3.1% for 2026.
Is ACWI Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on the MSCI AC World Index tracking ETF, iShares MSCI ACWI (ACWI), based on 1,236 Buys, 933 Holds, and 69 Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average ACWI price target of $160.82 per share implies 13.7% upside potential.
