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Digital infrastructure is rapidly becoming as essential as traditional physical infrastructure such as roads and utilities, with AI supercharging demand. For investors, the asset class offers durable growth, resilience, and more predictable cash flows than many traditional growth sectors. Yet much of the most compelling opportunity is increasingly moving behind private walls.
Advisors who focus exclusively on public markets risk missing meaningful exposure to the infrastructure build-out powering AI and the broader digital economy. Now is the time for advisors to understand this landscape and help clients participate in a long-duration trend that is fundamentally reshaping how the world works.
AI's continued growth depends on vast, affordable power and a major upgrade of U.S. infrastructure. McKinsey estimates that a cumulative $106 trillion investment will be necessary through 2040 to meet the need for new and updated infrastructure.1 These won't be optional projects.
The assets being built (power generation and transmission, data centers, fiber optics, and supporting systems) will become foundational inputs for nearly every industry. To understand the full scope of this transformation, the AI opportunity can be mapped across seven investable pillars: raw materials; semiconductors; the cloud; energy and supporting infrastructure; data; applications; and real estate such as data centers.
Private Assets Crucial to AI Infrastructure
Private infrastructure assets encompass essential physical systems like energy grids, roads, airports and data centers that are owned and operated by private entities. AI-related infrastructure builds on this model. Assets such as semiconductor fabrication plants, fiber networks and power grids are highly capital-intensive and designed for long-term use, making them better suited to private capital than to public markets constrained by quarterly earnings cycles.
Sophisticated investors have taken notice and are increasingly buying and building infrastructure in private markets. Private infrastructure assets under management surged from approximately $500 billion in 2016 to $1.5 trillion in 2024.2 In the wake of the AI boom, this growth has intensified: Private infrastructure fundraising reached a new milestone in Q1-Q3 2025, surpassing $175 billion for the first time, according to CBRE.3
Investors and advisors who focus only on public markets are missing a significant portion of this opportunity. In 2023, the Magnificent Seven (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla) drove nearly 60% of the S&P 500's total return; without them, broad public market performance was largely flat. This represents a crowded trade, and it's not equivalent to owning the infrastructure enabling AI.
A Different Kind of Exposure
The risk-return characteristics reinforce these advantages. Digital infrastructure offers a "hybrid profile," combining the growth potential of technology with the defensive characteristics of a utility. Private infrastructure represents a more pure-play exposure to the asset class, with returns more closely tied to the cash generation of underlying projects. Interestingly, private infrastructure has suffered losses in only one calendar year over the last two decades, demonstrating notably less volatility than public infrastructure.4
Unlike institutional investors, advisors have historically been under-allocated to private infrastructure, missing a key opportunity. This gap stems partly from the high capital requirements and illiquid nature of these assets. However, the benefits are compelling: Infrastructure returns have demonstrated an average correlation to global equities and global bonds of just +0.1 and -0.1, respectively.
For advisors seeking to reduce portfolio volatility while maintaining attractive return potential, a strategic allocation to infrastructure could meaningfully enhance diversification.5 Digital infrastructure should be viewed as an essential, cycle-resilient asset class that combines stable cash flows with long-term growth, making it a foundational component of a modern alternatives allocation.
Success requires selectivity, however. Advisors must be judicious in their allocation to infrastructure, given the wide return dispersion across managers and strategies. They should look beyond manager names to assess whether firms consistently identify the right opportunities, with long-term track records across market cycles serving as the most reliable proof of capability. As the AI value chain spans the previously mentioned seven pillars, advisors should diversify across them rather than concentrate risk in any single area.
We are witnessing a generational shift. The most durable value in AI may reside not only in software winners but also in the real-world infrastructure that makes AI possible. For clients, this represents exposure to the enabling layer of a once-in-a-generation investment cycle. For advisors, the question is increasingly less about whether to allocate to private infrastructure and more about how — specifically, to access the right managers and build diversified exposure that positions clients for long-term success.
Endnotes
1 Green, Alastair, Nangia, Ishaan and Sandri, Nicola. McKinsey. Sep. 9, 2025. “The infrastructure moment.”https://www.mckinsey.com/industries/infrastructure/our-insights/the-infrastructure-moment
2 Green, Nangia and Sandri, “ The infrastructure moment”
3 Tsoneva, Tania and Bhavsar, Kekti. CBRE. Dec. 9, 2025. “Infrastructure Quarterly: Q4 2025.” https://www.cbreim.com/insights/articles/infrastructure-quarterly-q4-2025
4 Bell, Michael. WealthManagement.com. Jul. 16, 2025. “Debating Private vs. Public Infrastructure in Client Portfolios.”https://www.wealthmanagement.com/alternative-investments/debating-private-vs-public-infrastructure-in-client-portfolios
5 Mulvihill, Aaron and Papa, Grant. JP Morgan. Mar. 14, 2025. “How can alternatives like infrastructure enhance diversification during volatility?”
https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/on-the-minds-of-investors/how-can-alternatives-like-infrastructure-enhance-diversification-during-volatility/
Alan Strauss is a senior partner & director of investor relations at Crystal Capital Partners.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
