Nvidia, OpenAI, DeepSeek, Microsoft, Google – the list of names driving the AI boom continues to grow. But there’s one thing that unites them all, and US asset managers are determined to benefit.
Consumers will ultimately decide which firms and products utilize the power of AI to their best advantage, but as the world adapts to the biggest tech revolution since the world wide web, data centers will be essential to the infrastructure.
That’s why 40% of asset managers surveyed by KPMG for a new report released today (Jan. 30) said they are prioritizing investment in data centers over the next two years, up from 27% just six months ago and putting them as the number two priority in real estate investments behind residential/build-to-rent (47%).
“Data centers have emerged as a cornerstone of modern infrastructure,” said Greg Williams, national sector leader for asset management at KPMG US. “As data centers become a more significant component of real estate portfolios, asset managers must adapt to the unique complexities they present in order to maintain competitive advantage in this expanding market.”
Despite this important focus shift for real estate, private debt and credit (36%) and private equity (31%) are expected to remain the top asset classes for ROI over the next three years, with real estate third (29%).
As well as being a key driver of investment priorities, AI is also impacting the business side of asset management.
KPMG’s survey of more than 100 industry executives discovered a shift from AI being in the conceptual stage to the developmental stage within organizations, frequently involving external sources to develop capabilities.
Back-office functions are leading the way in GenAI adoption - 44% utilize it for IT and 36% for routine communication and content summarization across workflows such as meeting notes, emails, and writing assistance).
Fund management (12%) and portfolio optimization (7%) are not common uses of GenAI while executives say data integrity, a lack of awareness and training, and security vulnerabilities cited as the main barriers to adoption overall.
The survey also identified factors affecting investment performance, cited by respondents. These were led by interest rate uncertainty (67%) followed by technological advancements (35%) and consumer confidence (34%).
The executives polled are looking mostly for stable market conditions and reduced financing costs as signals that the transaction environment is becoming more favorable.
“The rise in the 10-year Treasury yield since the Fed's rate cut in September 2024 signals a broader shift,” said Yelena Maleyev, senior economist at KPMG US. “Asset managers should pay close attention to trends in long bond yields, which will be crucial to adapting strategies beyond short-term rate movements."
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