UBS chief executive Sergio Ermotti said on Monday that the sharp correction in AI stocks over recent weeks was a reaction to excessively high hopes among investors. Speaking at a UBS conference in Sydney, he said the market had until very recently been "pricing perfection" for the technology sector.

Ermotti said recent US midterm election results and the global debate about building AI infrastructure could delay the sector delivering results. He added that while he was optimistic AI development would generate positive economic outcomes, he personally believed "the timing on how quickly we will get there, it's a little bit exaggerated."

Trillions wiped out in last week's sell-off

Trillions of dollars of world stock market value were wiped out last week over fears that Democratic election victories would bring tighter US regulations for the AI industry, though Wall Street equities mostly rallied on Friday. The Nasdaq rose 1.1% on Friday to 24,579.43, but still recorded its fourth consecutive weekly decline, falling 3.37% on the week into correction territory.

Ermotti also said some aspects of UBS's own use of AI had been slowed by the integration of Credit Suisse, which the bank agreed to acquire in a Swiss government-brokered rescue in 2023. He described Switzerland's response to the tougher regulation facing UBS as "extremely emotional" and "idiosyncratic", contrasting it with authorities in the US and Europe.