UBS has spotlighted quantum computing stocks as leaders in delivering 'meaningful breakthroughs,' positioning this emerging technology sector as a potential game-changer for the broader tech industry. The investment bank's analysis comes amid a period of elevated valuations across technology stocks, suggesting that quantum computing could represent the next significant growth driver.

Quantum Computing Emerges as Key Growth Area

The quantum computing sector has been identified by UBS as a rapidly expanding segment within the technology landscape. According to the firm's assessment, companies operating in this space are achieving substantial technological progress that distinguishes them from other tech subsectors. This development occurs against the backdrop of sky-high valuations that have characterized much of the technology sector.

Market Positioning and Future Outlook

UBS suggests that quantum computing stocks are not merely benefiting from the current tech rally but are fundamentally positioned to define the sector's future trajectory. The investment bank's analysis indicates that the meaningful breakthroughs being achieved by these companies could establish quantum computing as a cornerstone of the next chapter in technology sector evolution.

The firm's perspective highlights the growing importance of quantum computing technology and its potential to drive significant value creation. As traditional tech stocks continue to trade at premium valuations, quantum computing represents a specialized area where technological advancement appears to be translating into tangible progress.

Investment Implications

The UBS analysis underscores the potential for quantum computing stocks to emerge as leaders in the technology sector's continued development. With the firm describing these companies as achieving 'meaningful breakthroughs,' investors may find quantum computing stocks worthy of consideration as the sector continues to mature and demonstrate practical applications.

Source: https://www.cnbctv18.com/market/stocks/quantum-computing-stocks-to-watch-out-for-19824076.htm

UBS has significantly reduced adjusted EBITDA estimates for Zomato and Swiggy, reflecting the mounting pressure from intensifying competition in India's quick commerce sector. The investment bank cut Zomato's estimates by 10-18% and Swiggy's by 12-28% for the next two to three fiscal years, marking a substantial downward revision that highlights the challenges both platforms face in their battle for market dominance.

Competitive Pressure Intensifies Margin Challenges

The deterioration in margin outlook stems from notable intensification in competitive pressure that has persisted since September and continues into January. UBS's pricing tracker reveals that discounts have widened significantly across the sector, creating sustained pressure on profitability metrics.

This competitive dynamic reflects the intense battle for market share in India's quick commerce space, where customer acquisition through aggressive pricing has become a standard strategy. Amazon and Zepto have emerged as the most aggressive discounters among online platforms, offering the highest promotional incentives while Blinkit continues to maintain relatively lower discount levels, though still elevated compared to earlier periods.

Margin Recovery Timeline Extended

The most significant impact of UBS's downward revision involves the pushback in when the sector achieves sustainable margin improvement. For Zomato's Blinkit division, UBS now forecasts the quick commerce unit to reach breakeven in FY27, compared to FY26 previously—a critical inflection point that has been delayed by a full fiscal year.

Similarly, for Swiggy's Instamart, the margin trajectory has deteriorated substantially, with adjusted EBITDA margins down 120-130 basis points during FY27-FY30. The margin pressure reflects the reality that despite continued network expansion and category expansion helping to grow the overall addressable market, the sector's profitability improvement remains elusive in the near term.

Price Targets Revised Despite Maintained Buy Ratings

Despite the downward EBITDA revisions, UBS maintained Buy ratings on both stocks, reflecting confidence in their long-term positioning despite near-term margin headwinds. However, price targets were adjusted to reflect the changed margin outlook.

The price target reductions are particularly notable for Swiggy, which faced a steeper markdown of ₹70.00 per share. UBS's analysis suggests that the recent correction, coupled with a still very strong growth profile, keeps the firm positive on the space, indicating that current valuations may already be pricing in some margin pressure.

Valuation Methodology Reflects Conservative Stance

Despite the EBITDA headwinds, UBS's valuation methodology suggests the stocks may present value opportunities. Zomato is valued using a mix of DCF, sum-of-the-parts, and multiple approaches, with Blinkit valued at 40x 2-year forward EBITDA discounted back by a year. Swiggy's quick commerce unit Instamart was repriced to 0.8x 1-year forward GMV, compared to 6x 1-year sales previously, suggesting a more conservative stance on near-term profitability achievement.

UBS's analysis notes that while newer platform entries and category expansion are providing a solid multi-year growth runway, the immediate margin profile has deteriorated meaningfully. This assessment reflects the ongoing reality that quick commerce platforms continue to prioritize market share gains over immediate profitability in India's rapidly evolving e-commerce landscape.