AI Advancements Draw U.S. Asset Managers to Favor Data Centers in 2025: KPMG Survey

• Respondents expect private debt and credit (36%) and private equity (31%) to remain the top asset classes for ROI over the next three years, reflecting continued interest in the space as shown in our previous survey.
• Real estate (29%) rounds out the top three asset classes for the greatest forecasted ROI over the next three years.
• While residential/build-to-rent is anticipated to be the top real estate asset class (47%), respondent interest in data centers has increased dramatically, with 40% identifying them as a top real estate asset class for investment over the next two years, compared to just 27% who said the same six months ago.

• AI maturity is advancing, with organizations shifting from the conceptual phase (down 6 percentage points from 39% to 33%) to the developmental phase (up 13 percentage points from 26% to 39%) compared to KPMG’s July 2024 findings.
• The majority of respondents are turning to external sources for AI capability development, with 63% leveraging third-party platforms and their built-in features, and 20% enhancing these platforms with additional capabilities.
• Back-office functions are leading the way in GenAI adoption, with 44% utilizing it for information technology (IT) and 36% for routine communication and content summarization across workflows (e.g., meeting notes, emails, writing assistance).  
• There is plenty of room to grow with the use of GenAI, considering some of the least commonly used functions for technology were fund management (12%) and portfolio optimization (7%).
• Top barriers to AI adoption include concerns over data integrity (53%), a lack of awareness and training (45%) and security vulnerabilities (35%), all consistent with the July 2024 survey.

• Interest rate uncertainty (67%) is seen as the most significant factor affecting investment performance; followed by technological advancements (35%) and consumer confidence (34%).
• Stable market conditions (55%) and reduced financing costs (54%) are the key signals respondents are looking for to determine if the environment for transactions is becoming more favorable.
• Almost half (46%) believe the Fed funds rate will remain between 3.75% and 4.00% by the end of 2025.

“The rise in the 10-year Treasury yield since the Fed's rate cut in September 2024 signals a broader shift,” said Yelena Maleyev, Senior Economist at KPMG U.S. “Asset managers should pay close attention to trends in long bond yields, which will be crucial to adapting strategies beyond short-term rate movements."

• A majority of organizations (69%) continue to offer a hybrid work model, allowing employees the flexibility to work both remotely and in-office. In contrast, 27% of the organizations represented in the survey stated they are in-office five days a week, while only 5% remain fully remote.
• Additional top concerns for organizations in today’s environment include fostering meaningful interactions and connections (31%) and ensuring employee engagement and team-building in remote setting (30%).