Wall Street Investors Warn of AI Concentration Risks and PE's Exit Squeeze -- WSJ

By Maria Armental Private equity's highflying bet on the artificial intelligence build-out obscures risk and echoes past market bubbles, according to attendees at this week's Greenwich Economic Forum. While AI investments are propelling major stock indexes to record levels, panelists warned the rally obscures a broader economic fragility and creates severe technology obsolescence risks along with portfolio concentration risks. Firms and fund investors, they said, are likely facing a higher risk than they realize from AI concentration. This includes from overlapping exposure across strategies, what Jay Madia, who moderated an institutional investors panel, described as "just one big bet on the AI build-out." The AI concentration risks compound the industry's challenges. These include a mounting investment backlog and fears that private equity will no longer outperform public markets as higher interest rates stress-test private equity's operational model. "The glory days of private equity are probably behind us," David Graham, American Family Mutual Insurance chief investment officer, said on a.