UBS says record earnings, not hype, are driving 'one of the most significant bull markets in history'

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UBS has dismissed fears of a stock market bubble, arguing that the global rally is built on surging corporate profits rather than the speculative frenzy that inflated share prices…

UBS has dismissed fears of a stock market bubble, arguing that the global rally is built on surging corporate profits rather than the speculative frenzy that inflated share prices in the late 1990s.

Burkhard Varnholt, a senior financial market adviser at the Swiss bank, said investors were being pulled in by what he called "fabulous earnings momentum" rather than a fear of missing out.

The distinction matters, because earnings growth that outpaces revenue points to rising margins and productivity rather than to prices detached from underlying value.

Varnholt pointed to profit growth of more than 20% a year in the eurozone, with expected earnings per share up 22% in the first half of 2026 alone.

Across the MSCI All Country World ex-US index, forward earnings have jumped 36.9% this year and profit margins have reached a record 12.3%.

South Korea has led the global performance ranking, up 85%, after its forward earnings roughly quadrupled.

The bank framed the surge as the product of two capital-intensive megatrends: the artificial intelligence boom and a sharp rise in security-related spending funded by government budgets.

Together, UBS estimates, these investment booms amount to around 2.5% to 3.5% of global economic output, a scale it argues will sustain demand for years.

Varnholt singled out energy as a striking example, noting that earnings in the S&P 500 energy index rose 55.2% this year even as its valuation multiple fell.

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