Long Term Private Markets And AI Infrastructure Exposure Will Support This Undervalued Asset Manager

Catalysts

About Brookfield Asset Management

Brookfield Asset Management manages a global, diversified platform of alternative investment strategies focused on real assets, credit and related private market solutions.

What are the underlying business or industry changes driving this perspective?

• Growing allocations from institutional, insurance and individual investors into private markets are supporting the expansion of fee-bearing capital, which is already at US$603b and directly tied to future fee-related revenue and distributable earnings.
• Large, long-duration capital needs for infrastructure, power, energy transition and deglobalization are creating a wider opportunity set for Brookfield’s multi-asset platform. This can support deployment of the US$130b of uncalled commitments into new fee-bearing mandates and potential earnings growth.
• Rising demand for AI related infrastructure and power supply, including the US$100b global AI infrastructure program and the AI fund targeting US$10b, is supporting higher deployment into long-term contracted assets with potential to lift both fee-related earnings and margin efficiency.
• Structural growth in private credit, including real asset lending, asset-backed finance and insurance channels such as Brookfield Wealth Solutions and Just Group, is increasing the proportion of recurring, contract-based revenue and fee-related earnings across cycles.
• Broader access to alternatives for individual investors through private wealth, annuities and retirement products, where Brookfield is already seeing wealth channel growth around 40%, is expanding the client base and supports a larger, more diversified fee pool that can influence revenue, distributable earnings and dividend capacity.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Brookfield Asset Management's revenue will grow by 17.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 49.7% today to 53.7% in 3 years time.
• Analysts expect earnings to reach $4.4 billion (and earnings per share of $2.63) by about July 2029, up from $2.5 billion today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 25.1x on those 2029 earnings, down from 29.0x today. This future PE is greater than the current PE for the CA Capital Markets industry at 9.3x.
• Analysts expect the number of shares outstanding to decline by 1.01% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.27%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• If long term capital flows into private markets slow, for example if institutional or wealth clients reconsider allocations to alternatives after a period of strong fundraising in 2025 and the planned expansion across nearly 60 strategies, Brookfield Asset Management could see softer growth in fee bearing capital, which would affect fee related revenue and distributable earnings.
• The business is leaning heavily into large themes such as AI infrastructure, energy transition and deglobalization, including a US$100b AI infrastructure program and a US$10b AI fund. Any reduction in data center or power build out, changes in regulation such as constraints on new power generation, or slower than expected project execution could limit deployment of the US$130b of uncalled commitments and weigh on future revenue and margins.
• Credit has been a major growth focus with record fundraising in 2025 and a broad build out across real asset lending, asset backed finance and insurance channels. If private credit experiences higher defaults, tighter spreads for longer or weaker demand from retail and institutional clients, this could pressure fee rates and profitability, reducing earnings growth from the credit segment.
• The shift toward individual investors and retirement channels, including private wealth products that grew around 40% in 2025 and the push into 401(k) style vehicles, introduces sensitivity to investor sentiment and potential regulatory changes. These factors could slow net inflows and impact fee bearing capital and fee related earnings if product uptake is weaker than management expects.
• Acquisitions and partnerships such as the remaining Oaktree stake, Just Group and partner managers are expected to add around US$200m of annual fee related earnings. However, some of these platforms operate with lower margins or different cycles, so if integration is slower, margins compress or performance disappoints, the group level fee related margin and distributable earnings growth could fall short of current expectations.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of CA$80.24 for Brookfield Asset Management based on their expectations of its future earnings growth, profit margins and other risk factors.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$96.89, and the most bearish reporting a price target of just CA$67.46.
• In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $8.2 billion, earnings will come to $4.4 billion, and it would be trading on a PE ratio of 25.1x, assuming you use a discount rate of 7.3%.
• Given the current share price of CA$64.41, the analyst price target of CA$80.24 is 19.7% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.