Two investment giants reveal where they see opportunity now

Markets rarely offer investors the luxury of certainty, but right now, the list of variables seems particularly long: inflation remains sticky, interest rates are elevated, geopolitics is reshaping supply chains, and artificial intelligence is driving one of the largest capital expenditure cycles in decades.

So where should investors look?

To find out, I asked two global investment heavyweights that approach the question from different perspectives: Morgan Stanley’s Alexandre Ventelon from a predominantly public markets asset allocation perspective, and Blackstone's Co-Head of Global Private Wealth Investment Strategy, Winfield Sickles, from the world of private markets.

There are important differences in how they are positioning. Morgan Stanley favours US equities over Australian equities, is underweight fixed income and is using commodities and gold as diversifiers. For Blackstone, some of the most compelling opportunities feature a supply-demand mismatch where the capital required to close the gap is significant—a pattern it sees forming across infrastructure, real estate and private equity.

What is arguably more interesting is where their views converge. Both believe AI is evolving from a technology story into a much broader investment cycle encompassing power, infrastructure and the physical economy. 

Both see alternatives playing a bigger role in portfolios and believe the investment environment ahead could look very different from what investors became accustomed to over the past decade.

The old investment regime is over

For Ventelon, the starting point is that investors should not expect a return to the benign conditions that dominated much of the previous decade.

“The single most important idea shaping how we invest today is that the low-inflation, low-volatility regime that impacted portfolios for most of the last decade is behind us,” he says.

Morgan Stanley’s strategic asset allocation work now places greater weight on a higher-growth, higher-inflation environment, with an increased possibility of mild stagflation conditions over the next seven years.

“Firstly, strategic allocation matters more than ever, as it explains the overwhelming majority of long-term returns. Secondly, flexibility also matters more than ever,” Ventelon says.

That flexibility means wider allocation ranges and a greater role for alternatives and commodities. It is also occurring against a surprisingly resilient global economy. Morgan Stanley estimates US hyperscaler cash capital expenditure will reach around US$800 billion in 2026 and US$1.16 trillion in 2027, with AI-related investment contributing an average 0.6 percentage points to US real GDP growth since 2025.

The challenge is that stronger growth, combined with geopolitical pressure on energy prices, is keeping inflation and interest rates higher.

Morgan Stanley consequently remains overweight equities and alternatives and underweight fixed income. Within equities, it favours the US and Japan while maintaining a near-maximum underweight to Australia.

Ventelon points to an Australian market trading around 18 times forward earnings, versus a 10-year average closer to 16 times, while FY27 consensus earnings growth expectations have been cut to 8.9%.

“Domestically, we prefer Resources over Banks, alongside Healthcare and other strategic defensives.”

AI is becoming a physical-economy story

This is where the public and private market views begin to converge. 

For Sickles, the opportunity extends well beyond AI as simply a technology story.

“Artificial intelligence and digitisation remain among our highest-conviction investment themes and continue to reshape the global economy. What began as a technology story has evolved into a broader infrastructure and physical-economy story.”

As AI adoption broadens, demand for compute is rising sharply, with more than US$5 trillion projected to be committed to AI-related capital expenditure through 2030. Meeting that demand requires an equally significant buildout of the physical infrastructure behind the technology—data centres, chips, cooling equipment and, critically, power.

Power is emerging as one of the most acute constraints. US electricity demand is projected to rise around 40% over the next decade, just as ageing grids and transmission bottlenecks are making new capacity harder to bring online. In some markets, the time required to secure power has stretched from roughly one year historically to seven years or more today.

“These bottlenecks are not peripheral to the opportunity - they are the opportunity.”

For Sickles, those constraints help explain why private markets are particularly relevant today. Globally, more than USD$100 trillion is expected to be needed over the next 15 years to upgrade outdated energy, transportation, digital and other critical infrastructure. With government balance sheets constrained and private infrastructure AUM at USD$1.4 trillion, Sickles believes private capital will need to scale significantly to meet that demand—creating an enormous opportunity for seasoned infrastructure investors.

Blackstone has seen this dynamic play out firsthand. Its early conviction in digital infrastructure led it to invest in data centre operator QTS around 18 months before ChatGPT launched. Since then, QTS’s leased capacity has grown roughly 18-fold.

That same conviction led the firm to invest in AirTrunk, Asia Pacific’s leading data centre platform. With regional data centre capacity outside China projected to nearly triple by 2030, Sickles sees the opportunity extending well beyond data centres, requiring investment across power generation, electricity networks, semiconductors and other critical supply chains supporting AI and digitisation.

From AI enablers to AI adopters

Morgan Stanley sees the same broadening of the AI opportunity occurring in listed markets.

Rather than simply chasing the companies that enabled the first stage of the boom, Ventelon believes the next phase could reward companies that can use AI to generate measurable productivity improvements.

“Within equities, we favour a mid-cycle shift from AI enablers to adopters with durable cash flow and measurable productivity gains.”

Morgan Stanley is expressing this through a barbell approach. On one side are US hyperscalers, which continue to offer strong earnings visibility. On the other is global value exposure across financials, industrials and consumer discretionary companies as market leadership broadens beyond mega-cap technology.

AI is also closely connected to another of Morgan Stanley’s four major structural investment themes: the Future of Energy.

“AI needs data centres, while data centres need power,” Ventelon says.

That has implications for electricity grids and the metals required to expand and upgrade them, including copper and aluminium.

The other structural themes are Longevity, covering the investment consequences of ageing populations, and a Multipolar World, encompassing reshoring, defence, supply-chain security and critical materials.

“We treat these as long-duration structural trends, not short-term trades,” Ventelon says.

Where private markets see the next opportunities

For Blackstone, the supply-demand imbalance extends well beyond infrastructure.

Real estate is one example, where an ongoing cyclical recovery is converging with powerful secular demand. New construction has fallen sharply across many major sectors, with US logistics (warehouse) deliveries expected to reach a 12-year low in 2026. Demand, however, continues to expand.

Sickles notes that each US$1 billion of e-commerce sales typically generates more than one million square feet of additional logistics demand. Reindustrialisation is providing another tailwind, while around 15% of new leasing across Blackstone’s US Link Logistics portfolio has been tied to data centre and AI-related activity.

“We believe that combination - scarce new supply meeting multiple sources of durable demand - creates a particularly compelling setup for real estate.”

Private equity provides another avenue, combining a vast investable universe with the ability to actively shape outcomes. Sickles points to the breadth of that opportunity: nearly 90% of companies globally with more than US$250 million of revenue are privately held. But breadth is only part of the story. Blackstone also sees opportunities to acquire high-quality businesses at attractive valuations and apply its operational expertise to improve performance and accelerate growth. AI is increasingly expanding that value-creation toolkit.

“The opportunity is not simply to invest in the technology, but to help companies put it to work - reimagining workflows, improving productivity and creating better products for their customers.”

Blackstone is putting that thesis into practice through Ode, a company created with Anthropic to help deploy its technology at scale for Blackstone portfolio companies and beyond. The firm has also launched BXN1, a unified platform focused on certain investments across the AI ecosystem and high-growth technology sectors.

What could change the picture

Neither view assumes the path ahead will be smooth.

For Morgan Stanley, inflation is the most important variable over the next 12 months. Faster disinflation, Middle East de-escalation or stronger AI-driven productivity would make adding bond duration more attractive and could allow some defensive positioning to be unwound.

Renewed inflation would have the opposite effect, strengthening the case for commodities and gold while reinforcing Morgan Stanley’s underweight to fixed-rate bonds.

Central banks are another swing factor, as are the durability and eventual returns on the enormous sums being invested in AI.

“We are also monitoring the durability of AI capital expenditure, including revenue generation, monetisation, private funding and regulatory risks,” Ventelon says.

That question could become increasingly important as public and private markets pour extraordinary amounts of capital into AI, energy and the infrastructure connecting the two.

Morgan Stanley is looking for the listed businesses that can translate that investment into earnings and productivity, while Blackstone is investing across the ecosystem—from the infrastructure and power underpinning the buildout to financing the assets it requires and helping companies put the technology to work. 

Their approaches are different, but the underlying message is not - the next phase of the investment cycle may be defined as much by what needs to be built as by the technology driving the demand.

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