Executive Summary
UBS Chief Investment Officer Burkhard Varnholt presents a compelling counter-narrative to year-end profit-taking conventional wisdom. While most investors debate whether to lock in 2025 gains, Varnholt argues the current bull market is entering its most profitable phase—the technology productivity spillover from the Magnificent 7 to the broader market. His 'Magnificent 493' thesis suggests over 60% of non-mega-cap stocks now trade above their 200-day averages, signaling the beginning of a multi-year broadening rally that extends globally to Europe and emerging markets. The Swiss innovation ecosystem he recently observed—where startups focus on raising other companies' profits rather than just disrupting—provides a microcosm of how AI and deep tech will lift productivity across all sectors. This isn't just another Santa Rally; it's the structural shift where 'one good idea begets another good idea,' creating a compounding effect that could drive markets well into 2026. The key insight: investors fixated on Magnificent 7 valuations are missing the real opportunity in the 493 companies that will benefit from, rather than compete with, AI productivity gains.
Key Insights
what Burkhard Varnholt said“For the first time, the bull market has really broadened this year. It's broadened from the magnificent seven to the other impressive 493. More than 60 percent of them are now trading above their 200-day average”
what Burkhard Varnholt said“literally all of those Swiss top 100 startups were really pitching novel solutions to real problems in order to raise other companies' profits”
what Burkhard Varnholt said“the next thing will be that technology gradually lifts and shifts the productivity gain from the MEG-7 to the other impressive 493, and only then will this bull begin to really, in our view, live up to its full potential”
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