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 opposite ends of the spectrum: Morgan Stanley’s Alexandre Ventelon from a predominantly public markets asset allocation perspective, and Blackstone 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. Blackstone sees significant opportunities across infrastructure, real estate, private credit 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, one of the biggest opportunities comes from looking 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.”

Sickles estimates hyperscaler capital spending has increased roughly ninefold since 2021 to more than US$800 billion expected in 2026, with more than US$5 trillion projected to be committed to AI-related capital expenditure through 2030.

All that computing power needs somewhere to live. It also needs chips, cooling equipment and enormous amounts of electricity. US electricity demand is projected to increase around 40% over the next decade, according to Sickles, while ageing grids and transmission constraints have stretched the time required to secure power from roughly one year historically to seven years or more in some markets.

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

Blackstone estimates more than US$100 trillion will be required globally over the next 15 years to upgrade energy, transportation, digital and other critical infrastructure. Against that, private infrastructure assets under management currently stand at just US$1.4 trillion.

With government balance sheets constrained, he believes private capital will increasingly be required to bridge that gap.

The firm has already placed some sizeable bets on the theme. It invested in data centre operator QTS around 18 months before ChatGPT launched. Since then, QTS’s leased capacity has increased roughly 18-fold. 

In Asia-Pacific, Blackstone invested in data centre platform AirTrunk, with regional capacity outside China projected to nearly triple by 2030.

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. New construction has fallen sharply across many major sectors, with US logistics deliveries expected to reach a 12-year low in 2026. Demand, however, continues to expand.

Blackstone estimates every US$1 billion of e-commerce sales generates more than one million square feet of additional logistics demand. Reindustrialisation is providing another tailwind, while around 15% of new leasing across its US Link Logistics portfolio has been associated with 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 credit is another area Sickles believes is expanding beyond traditional corporate direct lending.

Asset-based finance is particularly interesting. Blackstone puts the market at roughly US$30 trillion and says investors can earn spread premiums of around 250 basis points over corporate lending while benefiting from tangible collateral. Banks still account for around 90% of the exposure.

“As traditional lenders reshape their balance sheets, private capital has a growing role in financing a broad range of assets, from infrastructure and equipment to consumer and real estate assets.”

Private equity provides another avenue, particularly where AI can be used to improve existing businesses rather than simply treated as an investment theme. Sickles notes that approximately 86% of companies globally with more than US$250 million of revenue remain privately held, providing a vast universe in which to find businesses where operational improvements can drive returns.

“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.”

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 targeting the physical bottlenecks and capital shortages created along the way. 

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.