Insights

Portfolio Manager Eric Bright discusses investment opportunities related to AI infrastructure, the potential risk of overbuilding in AI infrastructure, and current trends in global infrastructure.

How are you approaching investment opportunities related to artificial intelligence (AI) infrastructure?

We are constructive on the long-term growth in AI and believe infrastructure provides one of the most attractive, lower-risk ways to gain exposure to this theme. The expansion of AI, cloud computing and data-intensive applications is driving sustained demand for digital infrastructure, electricity networks and power system upgrades, which we see as a multi-year structural opportunity rather than a short-term cycle.

Our focus is on owning companies that control critical, asset-backed infrastructure with durable demand characteristics, strong counterparties and long asset lives. These businesses benefit from high barriers to entry, inflation-linked or regulated revenues, and earnings visibility that contrasts favorably with more cyclical or technology-led parts of the AI value chain.

Importantly, we do not view AI as a narrow or binary investment theme. Many of the infrastructure assets that support AI, such as data centers, transmission networks and utilities, are also essential to the broader economy and benefit from multiple, overlapping demand drivers. This provides a more resilient return profile and allows us to participate in AI-driven growth while maintaining a strong focus on risk-adjusted returns.

How are you addressing the potential risk of overbuilding in AI infrastructure, namely data centers and power generation?

Our approach is deliberately selective and focused on avoiding overly speculative capital allocation. We are particularly cautious around projects that rely on a narrow set of tenants, are located in non-core markets, or are justified by aggressive assumptions around AI-driven demand growth.

In data centers, we favor scaled assets in established hubs with strong connectivity, diversified customer bases and clear re-usability. We seek to avoid remote or highly specialized developments where the economics depend on a single use case or where alternative demand may be limited if assumptions change.

A similar discipline applies to power infrastructure. Although AI is accelerating electricity demand and reinforcing the need for grid investment and system upgrades, we are cautious around new generation capacity that is underpinned primarily by optimistic demand forecasts. Our focus is on regulated, contracted and asset-critical infrastructure where returns are supported by long-term frameworks rather than merchant exposure.

Overall, we believe this disciplined, asset-level focus allows us to capture the upside of AI-related infrastructure investment while mitigating the risks associated with overcapacity, valuation excess and weaker long-term economics.

Which trends in infrastructure do you expect to dominate over the next year

Several structural themes are likely to shape infrastructure markets as we head into 2026, including:

1. The AI investment cycle remains an important backdrop, although the focus is increasingly on how and where capital is deployed rather than the headline pace of spending. While hyperscaler capital expenditures continue to rise, we expect greater scrutiny around capital efficiency and asset quality. AI-driven demand continues to support investment across power networks, grid infrastructure and digital assets, with benefits extending well beyond data centers themselves.
2. Consolidation within transport infrastructure is emerging as a key theme, highlighted by the proposed merger between Union Pacific and Norfolk Southern. If approved, this transaction would create the largest U.S. rail operator and could unlock long-term efficiency gains, while also setting an important precedent for future consolidation in an industry with high barriers to entry and strong inflation-linked cash flows.
3. We are increasingly optimistic on healthcare infrastructure. In the U.S., senior housing is benefiting from improving fundamentals as supply growth slows and demographic demand accelerates. In the U.K., general practioner (GP) surgeries represent a stable, asset-backed segment with long-dated, government-supported income streams and limited new supply, making them attractive in a more uncertain macro environment.
4. We see a strengthening investment case for water utilities. Following a prolonged period of underinvestment, the sector is entering a phase of elevated capital expenditure focused on resilience, environmental compliance and network renewal. This is supporting a more constructive regulatory and earnings outlook, and we have recently initiated exposure where we see improving risk-adjusted returns.

Across these themes, our focus remains on a selective group of high-quality infrastructure owners with visible cash flows, strong asset criticality and the ability to deliver resilient returns across market cycles.