The world's largest government-backed investors are quietly moving away from public markets to chase AI infrastructure, data centers, and semiconductor plays
The world’s sovereign wealth funds collectively manage over $30 trillion. And they’re making a very deliberate bet: the best AI returns won’t come from buying stocks on public exchanges.
Instead, these government-backed investment giants are funneling capital into private markets at a pace that’s rewriting the playbook for institutional investing. Private market allocations across top sovereign wealth funds are projected to hit roughly 29% of assets under management by the end of 2025, up from 25% in 2020. That four-percentage-point swing, applied to a $30 trillion base, represents an enormous volume of capital migrating into deals that most retail investors will never see.
The deals tell the story #
Singapore’s GIC led a $30 billion Series G investment round for Anthropic, the AI safety company behind Claude. The AI Infrastructure Partnership, backed by Abu Dhabi’s MGX and the Kuwait Investment Authority, acquired a controlling stake in Aligned Data Centers at a valuation of approximately $40 billion. Saudi Arabia’s Public Investment Fund joined a consortium that took Electronic Arts private for $55 billion.
Sovereign wealth funds are estimated to have committed around $120 billion to AI infrastructure in 2025-2026 alone. The total investment in AI build-out from these funds now surpasses $350 billion.
Why private over public #
Sovereign wealth funds have the one advantage that almost no other investor possesses: time. A pension fund has liabilities to match. A hedge fund has quarterly performance pressure. A sovereign fund backed by oil revenues or national reserves can lock capital up for a decade without anyone complaining.
There’s also a geopolitical angle that’s hard to ignore. For Gulf states like Saudi Arabia, the UAE, and Kuwait, AI represents economic diversification away from hydrocarbon dependence. For Singapore, it’s about maintaining technological relevance in a region where China and the US are competing for AI dominance.
What this means for investors #
Valuations in private AI markets are likely to keep climbing. That $40 billion valuation for Aligned Data Centers signals that the floor for AI infrastructure valuations has been permanently raised.
This flood of sovereign capital into private markets could dampen returns in public AI stocks over time. If the best companies stay private longer because they can raise tens of billions without going public, public market investors get access to fewer high-growth AI names.
The concentration risk is real. Sovereign funds are herding into a relatively narrow set of themes: data centers, semiconductors, and a handful of frontier AI labs. The same patience that makes sovereign funds ideal private market investors also means they’re locked into their bets for years, regardless of how the landscape shifts.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our