UBS has named Palantir, AT&T and Spotify among its top stock picks across technology, media and telecommunications, even though all three have trailed the broader market so far in 2026. The selections underline a gap that has defined tech trading this year: solid operating results sitting alongside lagging share prices.

In a research note, the investment bank highlighted 14 companies, concentrating on businesses with distinct growth drivers, lower valuations and exposure to major industry trends such as artificial intelligence, cloud computing and digital services.

Palantir: Strong Fundamentals, Falling Valuation

Palantir shares are down about 1.5% this year, changing hands near $175. The stock came under pressure earlier in 2026 as investors questioned whether newer AI models could weaken demand for software companies.

The company's valuation has fallen sharply alongside its share price. Palantir traded near 180 times projected 12-month earnings in January, a multiple that has since been cut roughly in half — meaning investors now pay about half as much per dollar of projected earnings as they did at the start of the year, even as the business itself accelerated.

Operating performance, however, has remained strong. Palantir reported 93% year-over-year revenue growth in the second quarter, while adjusted operating margins climbed to 62% from 46% a year earlier.

UBS said demand for Palantir's AI and automation software remains robust and that the company has faced limited competitive pressure from AI model providers or other data software firms. The bank set a $250 price target on the stock, compared with a recent price near $175. The company's next quarterly report will show whether that growth-and-margin combination holds.

AT&T: Bundling, Fiber and Cash Flow

AT&T has also lagged the broader market, rising about 2.5% in 2026 to around $25.46. By comparison, the S&P 500 has gained about 11.4% this year.

UBS sees the telecom carrier benefiting from increased bundling across wireless and broadband services. The company is already a major U.S. wireless and fiber operator and has continued investing in fiber networks while maintaining cash flow. For investors, that balance matters because network investment and shareholder payouts draw on the same pool of cash.

According to UBS, that position gives AT&T room to continue share buybacks and maintain its dividend. The bank has a $31 price target on the stock, representing roughly 22% upside from recent levels. Upcoming quarterly updates on fiber expansion and cash generation will indicate whether that capital-return capacity persists.

Spotify: Weak Share Price, Margin Expansion Ahead

Spotify has performed worse than the other two picks this year, falling about 11% to roughly $519. The streaming company continues to add subscribers, although its latest earnings were hurt by higher operating expenses.

UBS expects Spotify to convert more free users into paid subscribers, raise prices and expand further into higher-margin products, including audiobooks. Together, levers target the company's central challenge: converting a growing audience into faster profit growth after a quarter in which higher expenses weighed on results. The stock trades at about 31 times projected earnings for the next 12 months, down from around 42 times at the start of the year — a decline of roughly a quarter. UBS set a $690 price target on the shares.

The bank also named Amazon, Pinterest, Procore Technologies and Texas Instruments among its preferred technology stocks.

Mixed Market Close, Rising Yields

The broader market finished Friday mixed. The Nasdaq gained 0.4%, the S&P 500 added 0.2%, and the Dow fell 0.2%.

The 10-year Treasury yield moved close to 5% as traders increased expectations for another Federal Reserve rate increase in October. A yield near that level sets the risk-free return against which equity returns are judged — a backdrop that is most consequential for companies whose valuations rest on earnings expected further in the future. Chip stocks recovered from losses earlier in the week, while oil prices eased below $100.

Palantir, AT&T and Spotify remain among UBS's selected stock picks as investors weigh earnings growth against higher interest rates, with the Fed's October decision and the next round of quarterly earnings serving as the nearest checkpoints for that judgment.