Wall Street and Private Finance Vie for $1 Trillion AI Infrastructure Opportunity

Banks and Private Finance Seek Slices of $1 Trillion AI Pie | PYMNTS.com

Big banks and private finance groups are both chasing the artificial intelligence (AI) craze. But for at least one of those Wall Street banking giants -- Morgan Stanley -- there's plenty to go around, Bloomberg News reported Sunday (Nov. 17). That report tells the story of a recent dinner hosted by Morgan Stanley bankers, and attended by representatives of private capital titans like Apollo Global Management and KKR. Morgan Stanley, the report said, argued that bankers and private finance groups should work together. Bloomberg says its analysis estimates that it will take at least $1 trillion to fund the data centers, electricity supplies and communications networks required to bring about a future where AI transforms "everything," while others put the total cost at twice that amount. "The view is very bullish," said Dominik Thumfart, head of EMEA infrastructure and energy origination at Deutsche Bank, which has worked on $17 billion worth of data center projects over the past three years. "This market will remain a major growth area on the financing side for several years to come. The investing curve is very upward looking." Banks, the report said, are scrambling to stay on top of the AI frenzy. For example, banks such as JPMorgan Chase have dedicated infrastructure teams, sources told Bloomberg, with one rival banker saying he doesn't have enough staff to handle the glut of data center deals. The same is true for debt funding, the report notes. At the Morgan Stanley dinner, the bank's representatives said lenders don't have the balance sheets to sate the desire for credit, leading to its offer to team up with private capital outfits. Meanwhile, recent PYMNTS Intelligence research finds that -- in spite of the growing dependence on generative AI (GenAI) for medium-impact tasks such as financial reporting and data visualizations -- many CFOs say they've seen limited return on investment (ROI). "Only 13% of CFOs say they are seeing 'very positive' ROI, down from 27% in March," PYMNTS wrote last week. "Additionally, 65% of CFOs cite limited ROI as a drawback to implementing AI across their organizations. This decline in ROI sentiment suggests that while CFOs recognize the technology's potential, they are still grappling with its full impact on their bottom lines." At the same time, many companies with at least $1 billion in yearly revenue are committed to increasing their GenAI investments in the next year.

Wall Street Bankers Spot a Fat Payday in $1 Trillion AI Hysteria

At a dinner hosted by some of Morgan Stanley's top bankers in New York last month, one topic dominated the table talk: the fortunes to be made from the frenzy around artificial intelligence. In the room were many of the marquee names of private capital. Apollo Global Management Inc., Ares Management Corp., Blackstone Inc., HPS Investment Partners, KKR & Co. and Oaktree Capital were all invited, the very same firms who've recently emerged as a serious threat to Wall Street banks' long reign over the lucrative world of corporate finance.