Private markets accelerate as AI and infrastructure reshape global economy

Private capital is no longer a backstage player; it is fast becoming a central engine of the global economy. In a new alternatives outlook, J.P. Morgan Asset Management presents what it calls a “public-private convergence,” arguing that private markets are approaching a scale that reshapes how innovation is financed, how infrastructure is built, and where long-term returns will accrue. According to J.P. Morgan, pools of private capital are now approaching USD 20 trillion and late-stage funding is enabling companies to remain private for much longer than in previous cycles.

The firm links this shift directly to the rapid expansion of artificial intelligence and the broader “electronification” of economic activity. J.P. Morgan highlights AI as a capacity-driven phenomenon that demands large, durable investments in data centres, networking, power generation and cooling, as well as the software and applications that run on that infrastructure. Industry data cited by the firm show the scale of AI investment has surged over the last decade, global AI spending reached about USD 93.5 billion in 2021, up from roughly USD 3 billion in 2013, underscoring how quickly demand for compute and related assets has risen.

That dynamic has pushed a wide range of alternative strategies into the foreground. Infrastructure funds are underwriting data-centre builds, grid upgrades and distributed generation; private equity is financing platform roll-ups in services, cybersecurity and vertical software; venture and growth capital are backing the application layer of agents and model tooling; and private credit is filling the financing gap between bank lending and public bonds. J.P. Morgan notes private credit has itself become a major capital source, running into the trillions and serving as a flexible, negotiated financing alternative for lumpy, collateralisable AI capex that often requires bespoke terms.

Deal activity underpins the narrative. According to J.P. Morgan’s analysis of global dealmaking, M&A volumes rose sharply in 2025, increasing by 39% to about USD 4.3 trillion, driven by large transactions in technology, healthcare and financial services. The wave of take-privates and strategic buyouts, exemplified by multi‑billion-dollar transactions in the sector, illustrates how corporations and sponsors are using private-market structures to capture long‑term value outside public markets.

The implications for investors are far-reaching. If the bulk of early compounding in AI and infrastructure will be captured off-exchange, allocations that exclude private strategies risk missing foundational sources of growth. J.P. Morgan argues that alternatives must move from tactical veneers to core components in portfolio construction, with particular emphasis on infrastructure and private credit as front-line exposures to the AI capital cycle. Crucially, manager selection and underwriting discipline become decisive: as private markets scale, return dispersion widens and average outcomes diverge from best-in-class performance.

Yet the growth of private markets carries distinct hazards. Valuation opacity and infrequent marks can leave a sizeable gap between private pricing and public revaluations; semi-liquid and evergreen vehicles create potential liquidity mismatches that could trigger gates or redemption limits under stress; and concentration risk can emerge as capital chases popular themes, compressing returns and weakening deal terms. J.P. Morgan acknowledges these frictions while framing the expansion as structural rather than purely cyclical.

There is also a credit dimension to the story. As AI disrupts business models across software and services, legacy revenue streams and margin structures could be compressed, creating pockets of credit vulnerability among leveraged borrowers. Private-credit portfolios and sponsor-backed companies may therefore face asymmetric risks if technological change outpaces covenant protections and underwriting assumptions.

For allocators, the practical choices centre on architecture not ideology: which private strategies to access, how to pair liquidity with long-duration assets, and which managers can navigate both the opportunity and the disruption. J.P. Morgan’s outlook positions the near-USD-20 trillion private market figure as a sign-post rather than a forecasted destination, a map indicating where capital, capacity and returns are increasingly being concentrated.

If the thesis holds, the coming decade will be defined not only by which technologies win, but by who finances the build-out and on what terms. Private markets appear set to provide much of the railwork for that transformation, but realising the upside will demand selectivity, robust underwriting and an acceptance that liquidity and transparency trade-offs are part of the price for participation.