【Major Bank Report】DWS bullish on AI capital expenditure boom, raises US stocks to "Neutral" Oil prices expected to hover at high levels for some time

The ongoing Iran conflict, DWS Global Chief Investment Officer Vincenzo Vedda stated that European markets are more susceptible to supply concerns triggered by the Iran conflict, while the U.S. markets have significantly benefited from the AI capital expenditure boom. Therefore, European stocks are downgraded to “Neutral,” and U.S. stocks are upgraded to “Neutral.”

“Factors supporting U.S. stocks come not only from better earnings prospects but also include the possibility of the Federal Reserve cutting interest rates, although such cuts may not occur until 2027; comparatively, the Eurozone currently has a higher likelihood of rate hikes; if there is no further military escalation in the Gulf, strong earnings performance is expected to provide further support for the stock market.”

DWS downgrades the energy sector from “Positive” to “Neutral”

Vincenzo Vedda pointed out that he is closely monitoring companies in the AI-related fields that continue to face supply bottlenecks. Given the strong performance of the oil sector after the Strait of Hormuz blockade, he has downgraded the energy sector from “Positive” to “Neutral.” As for traditional fossil fuel companies, whether the Strait remains blocked or gradually reopens in the future, the associated downside and upside risks are now largely reflected in stock prices. On the other hand, renewable energy suppliers are still expected to benefit further from structural demand shifts.

DWS remains optimistic about gold in the medium to long term. Vincenzo Vedda indicated that gold prices are expected to continue being supported by multiple structural factors, including central banks around the world increasing their gold holdings and market concerns about the dollar outlook. However, if stock market performance remains strong and yields stay high, short-term gains in gold may be limited.

Over 10% of global oil production has yet to return to the market

Vincenzo Vedda said that more than 10% of global oil production has not yet returned to the market, and refining capacity has also declined; further damage to Russian refining facilities has restricted refined oil exports, leading countries dependent on imported oil products to face more severe shortages. It is expected that oil prices will remain high for some time.