J.P. Morgan predicts private markets will become central to portfolios amid AI-driven changes

J.P. Morgan Asset Management on 9 December 2025 published its eighth annual Global Alternatives Outlook, setting out a 12-to-18 month view of private markets and real assets that frames them as an increasingly central component of diversified portfolios as AI-driven investment reshapes demand for power, infrastructure and specialised real estate.

According to the original report, the firm’s highest-conviction ideas span global real estate, infrastructure, transportation, timberland, hedge funds, private equity and private credit, as private markets “mature into a structural mainstay of global finance.” Jed Laskowitz, Global Head of Private Markets, said: “As many leading companies are staying private for longer, the private markets are deep and diverse, and the opportunity for investors is immense. Our 2026 Global Alternatives Outlook leverages our more than 60-year track record investing in nearly every facet of private markets to help investors understand the opportunities, manage the risks, and build more resilient portfolios.”

The report places particular emphasis on the consequences of accelerating AI investment. Anton Pil, Global Head of Alternatives Solutions, is quoted as saying: “We are experiencing a shift as hyper-globalization fades, global AI investment accelerates, and the positive correlation between stocks and bonds trends upward. In this environment, private markets will play an increasingly important role as portfolio diversifiers through real assets, and a broader access point for investors to the drivers of this structural shift through private equity and private credit.” Other J.P. Morgan research lays out the mechanics behind this thesis, noting a dramatic lift in corporate capital expenditure tied to AI and data-centre build‑outs, and describing an AI-driven energy bottleneck that is turbocharging demand for power generation and distribution assets.

In real estate, the firm expects commercial property to enter a recovery phase supported by prospective rate cuts, constrained supply and ongoing economic expansion. The analysis highlights particular strength in high‑powered industrial space where power availability has become a central site‑selection factor, and in residential segments, single‑family rentals, attainable multifamily and flexible living, where structural undersupply supports resilient performance.

Infrastructure is characterised as being at an inflection point. The Outlook argues capital expenditure will materially outpace depreciation for the first time this century, driven by surging energy demand, security concerns and the energy transition. The report favours vertically integrated utilities as beneficiaries of near‑term upside while retaining defensive characteristics. Complementary J.P. Morgan materials quantify the scale: large US technology firms have sharply increased annual capex from the mid‑2020s, helping to explain why the firm projects robust returns for core power and utility investments.

Transportation and timberland are both canvassed as steady, structurally supportive allocations. The firm says transport is undergoing a significant asset‑replacement cycle as ageing global fleets meet rising trade volumes, while timberland offers inflation protection, predictable cashflows and upside from improving voluntary carbon‑market standards. Geopolitical shifts in wood‑product trade are flagged as creating re‑routing opportunities for diversified forestry portfolios.

On the liquid side, hedge funds are portrayed as well placed to exploit elevated equity dispersion, single‑stock volatility and macro dislocation. Managers using relative value, statistical arbitrage and targeted long/short or event‑driven strategies are identified as likely to find fertile conditions. Private equity is described as entering 2026 on firmer footing, smaller and mid‑market segments should benefit from market normalisation, realigning valuation expectations and more borrower‑friendly credit markets; AI and healthcare innovation are singled out as expanding the private‑equity opportunity set.

Private credit is said to be maturing, with secondaries and a convergence toward public credit shaping deal economics, liquidity and investor access. The report highlights a continuing premium over public credit, particularly for senior‑secured US direct lending, while warning that heightened competition makes disciplined sourcing, documentation and manager selection critical.

The Outlook is published against the backdrop of J.P. Morgan research that estimates private markets approaching a near‑USD20 trillion scale and growing retail and retirement participation, underlining the trend of public–private market convergence. The firm’s wider 2026 market commentary also projects double‑digit equity gains in a world where AI is a major growth driver but where recession risk and inflation remain possible headwinds, factors the alternatives report treats as reasons to seek diversification and yield in private and real‑asset strategies.

J.P. Morgan Asset Management frames the opportunities alongside customary cautions. The company said its alternatives platform totals some $600 billion across multiple strategies and stressed that private market investments are generally illiquid, may involve long holding periods, higher fees, limited transparency and less regulatory oversight. The report reiterates that there are no guarantees of investment objectives being met and advises investors to consider objectives and risk tolerance and to consult advisers before investing.

The 2026 Global Alternatives Outlook therefore presents private markets not as a niche play but as a response to structural shifts, AI‑fuelled capex, energy and power constraints, supply‑side tightness in key real assets and the deepening scale of private capital, while underscoring the need for careful manager selection and risk management as these markets continue to evolve.