Infrastructure Poised for Continued Outperformance as AI and Decarbonization Drive Multi Year Capex Cycle | ClearBridge Outlook

What's New

ClearBridge Investments' 2026 infrastructure outlook highlights that listed infrastructure is benefiting from a convergence of structural tailwinds—AI driven power demand, decarbonization mandates, and aging network replacement—creating what the firm describes as unprecedented regulated earnings growth with visibility extending 7 to 10 years.

Why It Matters For private markets investors evaluating real asset allocations, infrastructure's defensive characteristics and essential service status provide earnings stability even in volatile macro environments, while current valuations sit at the lower end of their EV/EBITDA range despite generating significantly higher earnings growth than historical norms.

Big Picture Drivers

• AI power explosion: Data centers are on course to account for nearly half of U.S. electricity demand growth through 2030, with hyperscalers locking in 15 to 20 year contracts that provide utilities 9% to 12% returns on equity

• Decarbonization capex: Coal retirements and clean energy transitions continue driving investment into renewables, grid stabilization, and energy storage globally

• Network resiliency: Climate proofing, aging infrastructure replacement, and grid interconnection upgrades are fueling multi year capital expenditure cycles with regulated returns

• Policy tailwinds: Fiscal environments in the U.S. and Europe remain positive, with global monetary policy generally neutral to easing

By The Numbers

• US$6.78 trillion: Expected tech sector capex for new data centers through 2030

• 22% CAGR: Base case for global data center power demand growth to 2030

• US$49 billion: Projected annual investment in data center construction by 2030

Key Trends To Watch

• Nuclear renaissance: Small modular reactors gaining traction as the only clean base load 24/7 generation option alongside gas; Constellation Energy and other nuclear exposed utilities attracting investment

• Water infrastructure gap: Aging systems, climate pressures, and rising demand driving major upgrade cycles, particularly in the U.K. following the Cunliffe review

• North American gas pipelines: Expansions driven by new gas fired plants for grid stabilization and LNG export needs creating compelling opportunities

The Bottom Line For Investors

Infrastructure's combination of essential service status, long term contracts, and regulatory frameworks provides resilience against economic volatility while offering exposure to secular growth themes including AI, decarbonization, and onshoring. The asset class offers attractive risk adjusted returns with visibility that extends well beyond typical investment horizons, though manager selection remains critical for navigating grid constraints, political pressures on affordability, and supply chain execution risks.