AI at a crossroads: How AI is reshaping infrastructure

Key takeaways

AI is expected to drive exponential growth in demand for key infrastructure, which we believe will create significant opportunity for investment.

Implementation of AI is expected to power relevant improvements in financial and operational performance of infrastructure assets.

A holistic risk management framework needs to be in place to identify and address emerging risks and ensure sustainable positive outcomes for all stakeholders.

Introduction

The rapid adoption of generative AI is creating a surge in demand for key infrastructure to support deployment, creating an immense opportunity for investment in new projects.

Strong growth in demand for data storage and computer processing power call for massive investment in the complex infrastructure network required to run AI. This network is composed primarily of:

1. Data centres

2. The electricity required to power them

3. The fibre network to connect them to users 

Global demand for storage and computing power in third party data centres has grown rapidly in the last decade, on the back of rising digitisation and the migration of data storage and computing power to the cloud.

According to the US Department of Energy, electricity demand from US data centres has grown dramatically in the last decade, climbing from 58 terawatt-hours (TWh) in 2014 to 176 TWh in 2023, and is expected to climb to levels between 325 to 580 TWh by 2028.

The development of large-scale data centres – especially those that are being developed in secondary and emerging data centre markets – is in turn creating more attractive conditions for investment in new fibre network deployment.

AI in practice and its potential for infrastructure investors

The deployment of AI is enabling material improvements in efficiency through increases in productivity and optimisation of operations across infrastructure assets. 

Together with increased demand, these efficiency gains have the potential to translate into enhanced returns for infrastructure investors. Infrastructure assets can achieve tangible improvement in the quality of services they provide, in areas such as:

• Accident reduction: Via the adoption of new AI-powered tools including autonomous vehicles, robotics, and human enhancement technologies

• Customer experience: Through improved traffic prediction, incident management, safety and security processes, and enhanced customer support interactions 

• Efficiency gains: Through improved asset maintenance processes and the chance for AI to identify and maximise energy efficiency

• Revenue optimisation: Through improved capabilities to predict usage volumes. Growth in the deployment of sensors, and the ability of AI to make sense of new and massive amounts of the data, should improve assets’ ability to stimulate volume, increase utilisation, and better time capital expenditure programmes

AI challenges for the infrastructure sector

The infrastructure sector faces an intensification of existing challenges linked to AI. These include cybersecurity threats and the impact of automation on the workforce. It must also contend with new risks, including algorithmic issues stemming from generative AI solutions. These challenges can have potentially harmful effects on numerous stakeholders.

Compounding the challenge, the fast-moving evolution of AI technologies leads to a growing gap in the development of regulation that will be necessary to manage and mitigate these risks in a consistent and system-wide fashion.

This calls for robust frameworks that allow infrastructure owners and managers to identify, understand, and address emerging risks, including:

• Cybersecurity risks: Risk of more sophisticated attacks at significantly lower cost, via generative-AI generated code, deep fakes and automated phishing agents

• Algorithmic issues: Risk of the introduction of errors and biases. Exposure of companies to data privacy and intellectual property issues

• Labour impact: Proactively addressing risks to the workforce is critical, to ensure AI’s benefits are shared across stakeholders and the broader community

Conclusion

AI has the potential to reshape industries, improve lives, and solve complex challenges. Its ability to enhance decision-making and drive innovation makes it a powerful tool across sectors, not only for infrastructure.

To fully harness its benefits, it must be developed and implemented in ways that maximise its positive impact while proactively addressing risks. With thoughtful integration and responsible adoption, generative AI can unlock new efficiencies, fuel economic growth, and create new infrastructure investment opportunities.

For more, please read the full AI at a Crossroads paper.

This article is part of IFM Investors' 2025 Infrastructure Horizons trends report.