Oaktree Capital Management, the distressed-debt giant overseeing about $200 billion in assets, is reshaping its investment strategy to capture opportunities from the rapid rise of artificial intelligence while steering clear of sectors most at risk of disruption.
Focus on “Picks and Shovels”
Rather than backing AI developers directly, Oaktree is concentrating on the infrastructure underpinning the technology boom. The firm has repurposed land acquired from distressed sellers in Europe into data centers, securing long-term leases with investment-grade hyperscalers. This approach reflects a classic “picks and shovels” strategy — investing in the essential tools and facilities that enable AI growth.
Avoiding Disrupted Business Models
At the same time, Oaktree is reducing exposure to industries vulnerable to AI adoption. The firm has scaled back investments in call centers, white-collar staffing firms, and enterprise software providers, including both legacy and SaaS businesses. Executives argue that advances in AI coding and automation are accelerating the replacement of traditional software and reshaping service-based industries.
Strategic Outlook
By balancing infrastructure investment with defensive positioning, Oaktree aims to capitalize on AI-driven demand while mitigating risks tied to technological disruption. The strategy underscores a broader trend among private capital firms: betting on the digital backbone of the AI economy rather than competing in the crowded race to pick winners among AI applications.
