Private equity firms are increasingly directing capital toward physical infrastructure supporting artificial intelligence, a shift signaled by Apollo Global Management’s $750 million financing commitment to Wolfspeed, a silicon carbide technology producer, earlier this month.
The move reflects a broader recalibration within the industry, as initial investments in AI software companies yield limited returns. According to a recent report by Boston Consulting Group, most private equity firms saw limited financial gains from AI investments in 2025, with few successfully integrating AI into their operating models. This has prompted a pivot toward the foundational elements required to power AI’s expansion – data centers, semiconductors, and energy infrastructure.
Since 2020, private equity firms have invested over $1 trillion into information technology, with a significant portion now focused on these core components. The demand for AI-driven computing is driving investment in data center infrastructure, essential for the real-time processing and advanced computing requirements of artificial intelligence. Semiconductors, particularly silicon carbide, are also receiving substantial funding, as they form the backbone of AI hardware.
Early private equity involvement in AI-focused companies included KKR and Insight Partners’ 2015 investment in Cylance, a next-generation endpoint security platform utilizing artificial intelligence. Blackstone followed in 2016 with an investment in Blue Yonder, a provider of AI and machine learning-driven supply chain and retail solutions. TPG also invested in Noodle.ai in 2016.
As of 2023, there were 315 private equity firms with current investments in the Artificial Intelligence and Machine Learning industry, representing 573 current investments and 52 exits. The fifteen most active firms include Insight Partners, CPP Investments, Elaia Partners, Thoma Bravo, and Primavera Capital Group.
The shift towards infrastructure investments comes as the United States aims to maintain its leading position in the global AI race. Private equity investments are seen as crucial for strengthening the U.S. Semiconductor supply chain and bolstering cybersecurity capabilities.
EY reports that 84% of private equity funds are now utilizing AI to enhance efficiency and decision-making throughout the investment lifecycle, from initial deal sourcing to exit strategies. However, the focus is increasingly on enabling the technology rather than directly developing it.
