Institutional Research

The report attributes strong cross-asset conditions to growth underpinned by AI and government-backed strategic-autonomy investment. It estimates the current capex cycle could contribute 3% to 6% cumulatively to GDP over five years and advises against chasing the dollar after its recent repricing.

• The current cycle could become the second-largest post-reconstruction capex boom.
• The baseline and optimistic scenarios imply cumulative GDP contributions of 3% and 6%, respectively.
• Past major capex booms were associated with a gradual weakening of the dollar.
• The institution expects “calm in the storm” rather than a major dollar breakout for the remainder of the year.

Goldman Sachs finds that softer positioning and extremely narrow market breadth leave room for a catch-up if macro uncertainty eases. However, higher rates and an eventual fading of AI-capex-driven earnings support explain why investors have compressed valuations despite strong index returns.

• The S&P 500 is up 13% year to date, while forward 12-month EPS estimates have risen 29%; the forward P/E has fallen from 23x a year ago to 19x.
• The positioning indicator fell to -0.9, matching the March market-low reading, while the median S&P 500 stock is 16% below its 52-week high.
• Hyperscalers are expected to spend $800 billion on capex this year, and Goldman Sachs estimates this accounts for roughly half of S&P 500 earnings growth.
• The report argues that investors are assigning an above-average premium to three-year-ahead sales growth and less-than-usual weight to one-year-ahead growth.
• Goldman Sachs expects a weaker outlook for its Value factor after a gain of more than 25% since mid-2025.

Following a CFO meeting, Goldman Sachs highlights improving Hitachi Energy margins, potential High-Tech upside and a longer-term shift toward software and services. It maintains a Buy rating and ¥6,600 12-month target price.

• Hitachi Energy demand remains strong, with management seeing profit upside and scope to exceed its FY3/28 adjusted EBITA-margin target of 15%+.
• Hitachi aims to raise DSS productivity by 30% through AI by FY3/28, although GlobalLogic faces customer pricing pressure and automotive-related weakness.
• Goldman Sachs identifies services/software mix, 800VDC-driven energy TAM expansion and financial strategy as the key re-rating catalysts.
• The Buy rating and ¥6,600 target are based on a 13x FY3/28E EV/EBITDA multiple.

NIFTY fell 1% during the week amid oil and US-yield concerns, but Goldman Sachs sees improving foreign-fund positioning and AI-infrastructure-led capex as supportive underlying trends. The report retains Marketweight on India and expects NIFTY to reach 26,500 by June 2027.

• MSCI India trades at 19.6x forward P/E, an approximately 84% premium to MXAPJ.
• Global long-only funds remain underweight India by about 185bp, despite India recording the largest recent benchmark-relative exposure increase among EM funds.
• NSE500 capex growth is forecast at 16% in 2026; 42 AI infrastructure companies contribute 6 percentage points.
• AI Enablers' capex growth is estimated to accelerate to 65% in 2026E from 18% in 2025.
• August domestic equity-fund inflows rose 19% month-on-month to US$3.1bn.

UBS estimates that Beijing's new presale framework reduces project-level IRR to 10.1% from 14.5% under the prior model. The firm expects weaker land auctions and new-home supply, with a relative benefit for KE Holdings and a negative read-through for China Overseas Land & Investment.

• Beijing prevents developers from releasing presale funds before project completion.
• UBS estimates project IRR at 10.1%, versus 14.5% under the old model and 13.6% under Wuhan's model.
• The firm expects lower project economics to cool Beijing land auctions and new-home supply.
• KE Holdings may benefit from demand shifting toward existing-home transactions.
• China Overseas Land & Investment is negatively exposed, with Beijing contributing 18% of contract sales in H1 2026.

The report argues that consumer AI agents may increase insurance shopping and pressure sentiment, but underwriting, complex products and incumbent AI adoption should limit near-term disruption. Over time, AI could improve distribution efficiency, lead generation and agent productivity.

• Recent AI fears weighed on personal-auto and life-insurance names, but Morgan Stanley sees lead generation as the more immediate effect.
• Underwriting quality and balance-sheet utilization remain the key carrier differentiators.
• Simpler personal-auto and term-life products are the earliest likely use cases for AI-led shopping.
• Complex bundled, high-ticket and relationship-driven products should retain a larger role for human agents and brokers.
• AI can augment captive-agent workflows through customer education, needs assessment, data collection and follow-up preparation.
• Larger distributors may be better positioned to adopt agentic AI because of their scale.

The report argues that the Saudi offshore disruption created a temporary trough rather than damaged drilling fundamentals. ADNOC Drilling is the preferred defensive choice, Arabian Drilling offers utilization-led recovery potential, and ADES provides diversified growth but carries higher leverage and integration risk.

• Suspended Saudi offshore rigs are expected to return, implying 100% offshore utilization by end-2026.
• High-spec jack-up dayrates have doubled from pre-2022 levels to $180,000-$220,000.
• Saudi gas expansion and UAE capacity ambitions support incremental rig demand through 2030.
• Bernstein reiterates Outperform on ADNOC Drilling, Arabian Drilling and ADES.

Bernstein came away incrementally bullish after Aurora's investor day, citing driverless customer trucks running above 225,000 annualized miles. However, it does not yet underwrite the company's targets for more than 30,000 trucks, over $5 billion of revenue and about 60% gross margin by 2030.

• Customer trucks are already operating above 225,000 annualized miles per truck, supporting Aurora's technology and operating-model case.
• The $5 billion 2030 revenue target requires roughly 23,500 average trucks in service at a $0.85+ per-mile fee and 250,000 annual miles per truck.
• Bernstein sees utilization dilution and fee compression as linked risks as Aurora expands beyond selected, high-quality freight flows.
• The report's first observable financial test is gross-margin breakeven in 1H27 at approximately 500 trucks.

Citi sees Muse becoming the center of Meta’s AI strategy, supported by rapid early downloads, partner integrations and expanding glasses form factors. The firm reiterates Buy and its US$800 target price.

• Muse reached about 3.1 million U.S. downloads and roughly 725,000 DAUs in its first 15 days.
• Citi sees commerce, subscriptions and advertising as potential future Muse monetization paths.
• Meta expects more than 100 AI-glasses styles by year-end 2026, with broader category adoption expected into 2027.
• The US$800 target is based on about 22x Citi’s 2027E GAAP EPS of US$36.92.

UBS reports a modest recovery in European storage injections but expects EU inventories to enter winter materially below last year and the five-year average. Risks around Gulf LNG transit, an Asian price premium and a possible easing of China’s tariff on US LNG could further tighten the global balance.

• European gas prices recovered to the mid-€70s/MWh after briefly testing the low €70s/MWh.
• EU storage was 70% full on 22 September, versus 82% a year earlier and an 86% five-year average.
• UBS expects EU storage to reach 74% at the start of winter and fall to around 25% by winter-end.
• US LNG cargo arrivals rose 48% week on week and 70% year on year, with Europe receiving 70% of volumes.
• JKM regained a roughly $1.5/mmBtu premium over TTF, potentially pulling LNG away from Europe.
• US gas inventories remained 4% above the five-year average despite a below-average weekly storage build.