Brookfield Infrastructure Partners Sees AI Driving Growth Inflection

In Brief:

Brookfield Infrastructure Partners is projecting a return to 14% annual growth over the next five years—up from 10% recently—as normalizing interest rates and currency headwinds reverse while AI infrastructure deployment accelerates beyond anyone's expectations just a year ago, with hyperscaler capital expenditure exploding from $270 billion to $400 billion annually and chip power density increasing tenfold, forcing infrastructure investments the firm now estimates at over $7 trillion in the next decade. Sam Pollock, CEO of Brookfield Infrastructure Partners, presented alongside Leaf Williams (Managing Director, AI Infrastructure), Scott Peak (President, Infrastructure Business), and David Carrant (CFO) at Brookfield's 2025 Affiliate Investor Day in New York. Their presentation revealed how the firm's capital recycling program now self-funds 100% of new investments while generating 20% IRRs on exits, why they're developing seven AI factories across five countries representing $200 billion in total capital and 3 million GPUs, and why private market infrastructure valuations are trading three to four turns higher than BIP's public multiple, creating significant embedded shareholder value.

Big Picture Drivers:

• Macro Environment Normalization: Interest rates stabilizing with BIP issuing 5-year bonds at 3.7% compared to over 200 basis points higher two years ago, while US dollar softening may shift from headwind to tailwind after strengthening 15% from 2020 through early 2025

• Infrastructure Super Cycle: Global infrastructure needs estimated at $100 trillion through 2040 across digitalization, deglobalization, and decarbonization, with AI requirements growing year-over-year making that estimate likely conservative

• AI Capital Intensity Explosion: Hyperscaler capex on compute and data centers doubled in five years to nearly $400 billion annually, representing 1-2% of US GDP and already exceeding early 2000s fiber buildout while approaching late 1800s railroad construction scale

• Capital Recycling Maturation: BIP's asset rotation program grew 5x in five years, enabling the firm to self-fund 85% of investments over five years and 100% over the past three to four years while crystallizing 20% IRRs and 4x capital multiples

Key Themes:

• Growth Inflection Point: After delivering 10% annual FFO growth despite 200+ basis point interest rate headwinds and 15% dollar strengthening, BIP expects to return to 14% annual growth as macro headwinds reverse and strategic enhancements compound

• AI Infrastructure Scale Underestimated: The firm dramatically underestimated AI opportunity just one year ago, with current AI chip power density at 120 kilowatts per rack—10x non-AI workloads and 2x higher than forecast a year ago—while leading chip designers project another 5-10x increase to half a megawatt per rack within five to ten years

• Investment Discipline Framework: BIP maintains strict criteria requiring long-term offtake agreements with investment grade counterparties and structures returning capital plus minimum returns in downside scenarios, avoiding dotcom-era speculative buildout mistakes

• Counter-Cyclical Deployment Advantage: The firm's most successful marquee acquisitions occur during market uncertainty when competitors pause, with 2025's Colonial Pipeline and Hotwire acquisitions during trade war volatility already exceeding expectations

Key Insights:

• Embedded Organic Growth Quadrupled: BIP's capital backlog reflecting embedded organic growth has grown 4x over five years—the firm's highest returning investment category—while high-growth platform businesses owned have more than doubled.

• AI Factories Require 4x Investment: Traditional hyperscale data centers require approximately $10 million per megawatt while AI factories require $40 million total—4x cloud data center investment—with the largest incremental cost being direct GPU purchases as even best-funded corporate balance sheets prove unable to address immense capital needs.

• Sovereign AI Creates New Customer Category: The customer universe has expanded beyond a handful of hyperscalers to include native AI companies, enterprises, and sovereign governments pursuing AI infrastructure for data sovereignty and economic transformation, with Brookfield developing seven AI factories across five countries comprising 6 gigawatts and 3 million GPUs.

• Capital Recycling Creates Hidden Value: BIP's 2025 asset sales alone—$2.8 billion at 20% IRRs and 4x multiples with 10-11% implied buyer cost of capital—can create up to $6 billion incremental shareholder value when redeployed into new investments earning 15-17% returns, representing value creation never appearing in reported FFO or net income.

• Public-Private Valuation Gap Persists: BIP achieved 15x EV/EBITDA multiples on 2025 asset sales spanning four segments and six countries—three to four turns premium to where BIP trades publicly—demonstrating sustained private market appetite for high-quality infrastructure and embedded portfolio value.

Memorable Quotes:

• "We are at an inflection point that we think will see substantially higher growth rates in our business than we've achieved in the last 5 years." - Sam Pollock, explaining how macro normalization and strategic enhancements position BIP to return to 14% annual FFO growth

• "We will be the first to admit that we may have underestimated the sheer scale of the opportunity set. The growth is exponential and is much much larger than we imagined a year ago." - Leaf Williams, describing how hyperscaler capex increased 50% year-over-year from $270 billion to $400 billion

• "Chad GPT4 was trained using 25,000 GPUs over a period of 100 days. A modern AI factory will host a million GPUs and these are more powerful GPUs than the prior vintage of chips." - Leaf Williams, illustrating the scale transformation as Brookfield develops seven AI factories with $200 billion total capital deployment

• "In the last 3 to four years, 100% of all of our new investments were funded with capital recycling proceeds. That's right. Every single dollar we deployed into new investments was funded internally." - David Carrant, highlighting how BIP's matured capital recycling eliminated reliance on public equity markets

• "These are great returns by any standard. But what's more impressive to me is the fact that these were earned on either regulated utilities or highly contracted businesses." - David Carrant, explaining how BIP achieved 20% IRRs and 4x multiples across $2.8 billion in asset sales on low-risk infrastructure

The Wrap:

Brookfield Infrastructure Partners is positioning at the intersection of normalizing macro headwinds that constrained recent growth and the explosive emergence of AI infrastructure as a multi-trillion dollar category the firm admits it dramatically underestimated just one year ago. The company's ability to self-fund 100% of new investments through capital recycling while crystallizing 20% IRRs, combined with strict discipline requiring contracted offtakes with investment grade counterparties, allows deployment into AI factories and traditional infrastructure at scale without speculative risks that plagued previous technology buildouts. The persistent three to four turn premium between private transaction multiples and BIP's public trading multiple suggests significant embedded value, while the firm's projection of returning to 14% annual FFO growth reflects confidence that interest rate normalization, currency tailwinds, and unprecedented AI deployment will compound to drive materially higher shareholder returns.