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1. Trump’s deal with big pharma is a turnaround moment.

The big picture is that Trump’s pressure campaign on the pharma industry may be winding down. Since most big-pharma companies are already pledging large investments in U.S. manufacturing, they should be able to steer clear of heavy tariffs.

For products still being imported from European countries, a deal reached with the EU in late July caps U.S. tariffs on pharma exports at 15%.

Even after recent gains, the Arca Pharmaceutical index is still down about 5% over the past 12 months, compared with a 18% rise for the S&P 500. Signs of a weakening U.S. economy could give investors another reason to return to healthcare. Historically, it has tended to outperform during downturns. Add in a more forgiving environment in Washington D.C. and pharma stocks could be just what the doctor ordered for investors.

2. UK stocks at bargain valuations.

“Despite ongoing uncertainty and persistent noise around the UK economy and political landscape, there’s plenty of opportunity here in the UK equity market,” says Bethany Shard, a fund manager at Invesco.

“In the UK market there’s a large number of word-class companies, operating internationally and you’re getting access to them at valuations that are often undemanding.”

3. The central bank of Nvidia has replaced the FED.

4. ASML Holding is coming back into favor as a play on the boom in artificial-intelligence.

ASML's performance over the past year is well behind that of other companies in the AI chip supply chain such as Nvidia or Taiwan Semiconductor Manufacturing (TSMC).

The problem has been a slowdown in spending on ASML's most advanced extreme ultraviolet lithography, or EUV, tools by Samsung Electronics and Intel. That has left the Dutch chipmaking machinery company dependent on investment by TSMC, which has been reluctant to commit to buying ASML's latest high numerical aperture, or High NA EUV, machines.

UBS sees two major areas of optimism for ASML which could spur spending on its tools -- AI-driven growth in the memory-chip market and better-than-expected sales of smartphones and personal computers. High-bandwidth memory (HBM) chips are a necessary component of the latest AI processors from the likes of Nvidia and there is a race on to produce the most advanced HBM products. South Korea's SK Hynix is the current leader and it said last month it had assembled a High NA system, which it claimed was the industry's first for mass production. "Memory accounted for 30% of ASML's revenue in 2024...underscoring its significant exposure to this segment, particularly due to its strong alignment with advanced memory technologies such as HBM, which has seen a sharp increase in EUV layer adoption over the past three years.”

Analysts also forecasts a solid sales performance across smartphones and PCs, two areas increasingly being transformed by AI capabilities. TSMC is the dominant manufacturer of advanced smartphone chips for the likes of Apple and Qualcomm, and mass production of its 2-nanometer chips is likely to require more of ASML's machines. That means ASML is set to grow its revenue by around 3% in 2026, accelerating to 7% in 2027, according to the UBS forecasts.

5. The state of the obesity market.

Novo Nordisk and Eli Lilly dominate the weight-loss market.

The Danish group’s Ozempic was released in 2018 for diabetes but is also widely used to tackle obesity, and was followed three years later with Wegovy, which is approved specifically for overweight patients. Eli Lilly followed close behind with Mounjaro and Zepbound. These medications are part of a class of drugs known as GLP-1s which work by mimicking a hormone that slows the emptying of the stomach and suppresses appetite, and have enabled users to cut weight by up to 20%.

The two pharmaceutical giants are preparing new medications including oral alternatives and others that could potentially spark greater weight loss.

Yet rival drugmakers are still trying to catch up. In September, Roche unveiled its strategy to become a top three player in the obesity sector by 2030 after scooping up U.S. drugmaker 89bio for $3.5 billion. The Swiss group hopes to enter the market with an arsenal of products to service the widest possible pool of customers. It previously bought Carmot Therapeutics in 2023 for nearly $3 billion, and earlier this year it also splurged $1.6 billion on a deal to use Zealand Pharma’s oral weight-loss drug. Pfizer also bulked up its obesity portfolio via a $7 billion purchase of U.S. biotech Metsera. In the UK, AstraZeneca has partnered with China’s Eccogene.

Eli Lilly now trades at around 27 times forward earnings, nearly double the average for pharma companies, according to Visible Alpha data. While Novo Nordisk’s premium has diminished in recent months amid management churn and concerns about its pipeline, it is still worth some 14 times forward earnings, while Pfizer trades at roughly eight times.

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