EY Outlook | PE firms bet big on AI, infrastructure as sovereign funds surge

What's new: Private equity is transforming its playbook for 2025, emphasizing AI implementation, infrastructure investments, and new partnerships with sovereign wealth funds while expanding beyond traditional buyouts.

Why it matters: With PE assets projected to reach $8 trillion by 2028, firms are finding innovative ways to deploy capital and generate returns in an evolving market landscape.

The big picture: The industry is pivoting from AI exploration to implementation, while simultaneously expanding into infrastructure and embracing sovereign partnerships. This evolution signals a fundamental shift in how private equity operates and generates value.

By the numbers:

• PE firms have invested over $100 billion in data centers in the last three years

• Sovereign wealth funds deployed nearly $30 billion in US PE deals year-to-date

• Private credit funds are expected to grow from $1.5 trillion to $3 trillion in five years

• AI-driven tools are cutting processing costs by up to 70%

Key trends to watch:

• Infrastructure and technology

  • Massive expansion in data center investments continues

  • Energy infrastructure remains a key focus

  • Digital infrastructure becoming critical for AI growth

• AI implementation

  • Focus shifts from exploration to practical applications

  • Enhanced deal sourcing and due diligence capabilities

  • Streamlined portfolio management processes

• Capital evolution

  • Private credit market expanding rapidly

  • New fund structures emerging for retail investors

  • Sovereign wealth partnerships increasing

The bottom line for investors: Private equity is rapidly evolving beyond traditional buyouts, with firms adapting to capture opportunities in technology, infrastructure, and new capital sources. Success in 2025 will depend on embracing these changes while maintaining operational excellence.