Highs today, higher tomorrow? UBS sees AI adoption outpacing e-commerce history

Even as the Nasdaq 100 sails to new all-time highs, investors have no reason to believe the booming tech trade is about to run out of steam.

According to a new report from global financial services firm UBS, the artificial intelligence party is still just getting started, and accelerating AI adoption across industries suggests there is significant room for further growth.

The tech-heavy Nasdaq 100 index reached a new peak this week, a move that coincided with broader market optimism after US President Donald Trump announced a ceasefire agreement between Israel and Iran.

The recent gains in the index have been largely propelled by powerful rallies in top semiconductor companies like Advanced Micro Devices, Broadcom, and Nvidia.

These three firms, widely recognized as leaders in the artificial intelligence space, have spent the last month moving steadily higher, showcasing their strength.

The remarkable ability of these top tech companies to withstand volatile market conditions and continue making progress has captured the attention of prominent market commentators.

Investor and former PIMCO executive Bill Gross, for instance, recently predicted a “little bull market” for stocks, specifically citing the clear dominance of the AI market as a key driver.

UBS: stick with tech as AI adoption crosses key thresholds

Now, UBS is advising its clients to stick with the tech trade.

Their rationale is clear: the AI revolution is not a fleeting trend but a fundamental shift in its early stages, with adoption rates now accelerating rapidly.

Citing data from a recent Census Bureau survey on the use of AI in the workplace, UBS highlighted that the use of this transformative technology is rising steadily.

“AI adoption rates rose to 9.2% in the second quarter of this year, from 7.4% in the previous three-month period and 5.7% in the December 2024 quarter,” the report states.

This trajectory is particularly significant when compared to previous technological shifts.

“This means AI adoption is likely to soon cross the 10% threshold that took US e-commerce 24 years to reach,” the UBS report notes, underscoring the unprecedented speed of the current AI integration.

From cost savings to life savings: AI’s tangible impact

The benefits of AI are not just theoretical; they are already generating tangible results for major corporations.

UBS highlights the example of Amazon Q, a virtual assistant powered by generative AI, which is reportedly “saving around USD 260mn every year through coding assistants.”

Similarly, the report notes that an estimated 20%-30% of Microsoft’s coding is now completed by AI, and that PayPal utilizes AI to handle a staggering 80% of its customer service interactions.

Beyond corporate productivity, the report also emphasizes the profound benefits of utilizing AI in healthcare.

Its authors note that AI has proven highly effective in critical areas such as detecting abnormal tissues that might have been previously overlooked by human analysis, showcasing its potential to improve and save lives.

All of these real-world applications suggest that AI adoption is set for continued and rapid growth in the near future.

This, in turn, is expected to pave the way for the sector’s leading stocks to continue their upward trajectory.

“We believe a peak in overall AI adoption is still a long way off, and accelerating AI use is set to drive further monetization across industries,” UBS concludes, presenting a strong case for continued investment in the tech sector’s AI leaders.

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