Milken 2026: Moving from thematic conviction to execution advantage

The overall tone at the conference was upbeat. Investors, the majority of whom are US-based, generally appeared comfortable looking past current geopolitical tensions and focusing instead on strong markets, continued deal activity and the growth potential of AI.

AI is the main source of this optimism. In 2025, AI was one investment theme among many. In 2026, it has become the theme shaping conversations across public markets, private equity, credit and infrastructure. Investors are no longer only asking which technology companies will benefit. They are also asking who will finance the buildout of AI, who will supply the power and data-centre capacity, and which companies will use AI to become more efficient.

For Ontario Teachers', optimism is welcome, but it cannot replace discipline. Our focus remains on developing our views, planning for different economic scenarios, maintaining liquidity, and building a portfolio that can perform through a range of market conditions.

Software was a major topic in conversations about private equity and increasingly in discussions about credit. Investors are still trying to understand how much pressure on software companies is temporary and how much reflects deeper changes in the business.

This matters because software companies have often been valued highly based on recurring revenue and strong growth. Today, buyers, lenders and boards are asking harder questions: Are customers still willing to pay the same prices? Will AI lower costs or increase competition? Are growth rates slowing because of the economic cycle, or because the product is less differentiated than expected?

The result is a more cautious deal environment. There was a common view that it will take time for the market to fully understand the impact on software businesses and for valuations to reset.

AI has moved beyond the early stage when companies could stand out simply by saying they were adopting the technology. Most companies are now exploring AI in some form. The real difference will be whether they can use it in ways that improve how the business works.

That means integrating AI into key business processes, effectively managing data and measuring whether the tools actually improve productivity, costs or customer outcomes.

This could widen the gap between investors with strong operating capabilities and those simply hoping to benefit from the AI trend. For active owners like Ontario Teachers', the opportunity is to help portfolio companies move from experimentation to measurable value.

The excitement around AI is not limited to large language models and software applications. AI also depends on digital infrastructure: data centres, power generation, transmission, cooling systems and related infrastructure.

Demand for these assets is high, while supply remains constrained in many markets. That creates potential opportunities for investors with infrastructure experience, but the opportunities need to be evaluated carefully.

The key is to treat these assets as infrastructure investments, not as a shortcut to buying into AI hype. That means focusing on contract quality, power availability, location, regulation, financing costs and long-term demand.

Geopolitics was another major theme, but the discussion was less abstract than in past years. Investors are increasingly asking how changes in government priorities, national security needs and supply-chain strategy could create both risks and opportunities.

Aerospace and defence stood out as one area attracting more attention. Increased defence spending, rearmament and national-security priorities are making the sector more relevant for private-market investors.

The broader point is that geopolitics is no longer only a risk to monitor from the sidelines. It is becoming a factor that can shape revenues, regulation, capital spending and competitive advantage across sectors.