The artificial intelligence boom, and the buildout of digital infrastructure to support it, have resulted in a significant shift in capital allocation to the sector by institutional investors.
According to a survey from Dynamo Software Inc., 88% of asset allocators surveyed in September and October said they planned to grow their allocations to AI investments over the next year, up from 75% in 2024.
Data centers and infrastructure were named by surveyed limited partners as the area of AI they are most interested in funding (60%), followed by workflow automation (55.29%), cybersecurity (45.88%), predictive analytics (42.35%) and robotics (32.94%).
The survey also found that 32.56% of LP respondents plan to increase investments with general partners who use AI in their technology decision making, while 44.19% said they do not, but plan to in the future.
The most popular opportunities for LPs to use AI, according to Dynamo, include document processing and automation (61.9%), investment research and due diligence (45.24%), and portfolio performance analysis (45.24). These were followed by portfolio construction analysis (14.29%), risk analytics and exposure management (11.9%), and committee and board reporting (11.9).
On the adoption of AI, 59% of respondents said they are in the beginning stages of using AI. Another 29.41% said they have incorporated AI in some of their standard processes. Seven percent of respondents said they use AI extensively, while another 4.71% said they do not use the technology at all.
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Tags: AI, Artificial Intelligence, data centers, Dynamo Software