Against this environment and with limited action expected from major central banks this year, Sai remains overweight equities, neutral on bonds and underweight cash.

“AI-driven earnings growth is expanding beyond the technology sector, benefiting industries such as industrials, utilities and infrastructure,” he said in a note. Sai is constructive on this trend as long as earnings delivery remains strong. In line with a number of investment managers, emerging markets excluding China remain his preferred region.

Sai noted the localised correction in Taiwan and South Korea, which reflects a pause in AI and semiconductor leadership after a period of exceptional outperformance. “Outside of these markets, growth remains resilient and inflation remains contained,” Sai added. he expects emerging markets to deliver the highest earnings growth in the world this year at 56 per cent, more than double that of their developed peers. (For more on the South Korea equity market volatility and wealth managers' views, see here.)

Sai remains neutral on US equities, where AI leadership is balanced by demanding valuations. According to his calculations, 70 per cent of US earnings growth comes from AI-related mega-cap stocks, by far the highest share in the world. While this concentration creates vulnerability in case sentiment towards AI weakens, it also means that the US is still the primary beneficiary of the AI supercycle. That said, valuations are unattractive, leaving little room for disappointment. He maintains a neutral stance across other developed markets.

At a sector level, Sai said Pictet remains overweight in technology, alongside industrials, utilities and financials, which are well placed to benefit from the current growth environment and AI-driven investment.

US vs emerging markets
Adrien Roure, multi-asset portfolio manager at is also positive about tech and AI-related investment. However, in contrast with Sai's neutral stance, he maintains a constructive on US equities and developed markets. “US equity markets have recorded significant gains, driven primarily by the technology sector and the semiconductor segment. This momentum illustrates the strength of the investment cycle linked to AI and the persistence of supply constraints in certain strategic segments,” Roure said.

He is positive on US equities and AI-related themes; he favours broad diversification such as through small and mid-cap stocks. “The latter, recently affected by the rise in real rates, should benefit from a resilient economy and potential stimulus measures in the run-up to the midterm elections,” he said.

“The concentration of performance is also evident in emerging markets, with South Korea and Taiwan appearing as the main Asian beneficiaries of the semiconductor cycle. However, this now highly targeted positioning by investors, combined with increased use of leverage, calls for caution in the short-term,” Roure said. “Nevertheless, the fundamentals of emerging markets remain solid, and any correction could represent an interesting entry opportunity for medium-term investors. Finally, certain Asian technology players, notably Chinese ones, also represent growth drivers within the emerging universe.” 

Roure takes a more cautious stance towards European equities, arguing they suffer from fragile economic activity, persistent energy reliance on Gulf supplies and the chance of a return of political risk in the second half of the year. However, he maintains a positive view on certain segments such as defence, supply chain security, notably after Germany and the EU's recent hike in defence spending.

Fixed income and gold
Sai has upgraded gold from neutral to overweight as investor demand is strengthening and emerging market central banks continue to increase reserves. He sees further upside for the precious metal as real interest rates gradually ease, eroding the opportunity cost of holding a non-yielding asset.

In fixed income, higher yields have improved value across parts of the market. However, stronger growth and persistent inflation pressures mean that Sai does not see the case for extending duration. He remains neutral on government bonds and credit. In currencies, Sai has downgraded the Japanese yen to neutral because improved growth expectations and stronger risk appetite make the currency less attractive as a defensive allocation.

Indosuez's Roure said the bond market is continuing to be influenced by the path of inflation and how monetary and fiscal policies play out. He favours short-dated maturities in the euro area, and retains a positive view on high-quality credit in the euro area. Yields remain attractive despite spread tightening. He is more downbeat about US credit, where the increase in issuance, notably by “hyperscalers,” is a reason for caution. 

Finally, Roure is positive on emerging market debt in local currencies, which offers attractive diversification potential thanks to high real rates and a more stable macroeconomic environment.