Brookfield Corporation, a global investment manager, has positioned itself at the intersection of several global investment megatrends. The company expects to grow its earnings briskly over the next five years.
Brookfield Corporation owns 73% of Brookfield Asset Management, which has over $1 trillion in assets under management. Its other businesses include Brookfield Wealth Solutions and a portfolio of operating businesses such as Brookfield Infrastructure, Brookfield Renewable, Brookfield Business, and Brookfield Property.
The company is capitalizing on AI infrastructure, decarbonization, increased investor allocations to alternatives, the expansion of private credit, and the commercial real estate recovery. These catalysts position Brookfield Corporation to grow its earnings significantly in the coming years, supporting its long-term target of delivering total annualized returns above 15% for its shareholders.
Brookfield believes AI could become the most impactful general-purpose technology in history. The company estimates that total spending on AI-related infrastructure will exceed $1 trillion this decade and $7 trillion over the next 10 years.
Late last year, Brookfield Asset Management launched its inaugural Brookfield Artificial Intelligence Infrastructure Fund, anchored by an investment from Brookfield Corporation. The fund aims to acquire up to $100 billion of AI infrastructure assets. The first seed investments included the launch of the Brookfield-owned cloud services company Radiant and up to $5 billion in advanced fuel cells developed by Bloom Energy.
Brookfield Infrastructure is investing up to $140 million into one of those fuel cell projects. That entity is also investing in building out several global data centers and in two U.S. semiconductor fabrication facilities. Meanwhile, Brookfield Renewable is investing heavily to build out additional renewable energy capacity to support AI data center demand.
Another trend is the rise in individuals seeking alternative investments. They hold $40 trillion in wealth, which is nearly double the size of the institutional investor capital pool. Brookfield created its wealth solutions platform to provide individuals with solutions such as annuities. Additionally, Brookfield Asset Management is developing investment products designed to meet the needs of individual investors.
Add in other growth drivers such as the recovery of commercial real estate and the expansion of private credit, and Brookfield believes its core businesses will grow its distributable earnings at a 20% annualized rate over the next five years. The company's three businesses generate robust and growing free cash flow, providing it with additional capital to allocate in creating value for its shareholders.
The company believes its capital allocation strategy, which includes share buybacks, fund investments, and acquisitions, will add another 5% to its annual earnings-per-share growth rate over the next five years, boosting the total to 25% annualized. That drives Brookfield's view that its stock will be worth at least $140 a share by 2030.
Brookfield Corporation has delivered a 19% annualized total return over the last three decades, compared to the S&P 500's 11% annualized return. It is in a strong position to deliver similar, if not better, returns over the next five-plus years.