Institutional investors are increasingly shifting their focus toward artificial intelligence as a central investment strategy. A recent survey conducted by Dynamo Software Inc. revealed that 88 percent of asset allocators surveyed between September and October plan to increase their allocations to AI over the next year, up from 75% in 2024.

This shift indicates that AI is evolving beyond a niche experiment. It has become a core element of investment strategies for many institutional players, signaling a long-term commitment to the technology and its applications.

Sectors of AI Attracting Capital

The survey highlighted the specific AI sectors that are drawing the most investor interest. Data centers and infrastructure emerged as the top priority, with 60% of limited partners stating this area is where they are most likely to allocate funding. Following closely are workflow automation at 55.29%, cybersecurity at 45.88%, predictive analytics at 42.35%, and robotics at 32.94%.

These numbers suggest that investors are prioritizing the backbone of AI, focusing on infrastructure and automation first before branching out into more specialized or complex applications.

Limited Partners and General Partners: AI Integration

The survey also explored how limited partners and general partners are integrating AI into their investment processes. Approximately 32.56% of limited partners indicated they plan to increase investments with general partners who already incorporate AI into their technology decision-making.

Additionally, 44.19% of respondents stated that they do not currently invest with such general partners but plan to do so in the future. These findings show that investors are placing increasing importance on AI competence. General partners who have yet to adopt AI may face competitive challenges in attracting institutional capital.

AI Use Cases Gaining Traction

Investors are identifying clear areas where AI can add value to operations and decision-making. Document processing and automation rank highest, with 61.9% of respondents viewing this as a key opportunity. Investment research and due diligence, along with portfolio performance analysis, each attracted 45.24% of interest.

Other areas such as portfolio construction analysis, risk analytics and exposure management, and committee or board reporting showed lower engagement, ranging from 11.9% to 14.29%. These results indicate that investors prefer to apply AI first to streamline existing workflows and extract actionable insights before moving into more complex strategic functions.

Adoption Levels Among Investors

In terms of AI adoption, 59% of respondents report they are at the beginning stages of implementation. Around 29.41% have integrated AI into certain standard processes, while 7% use AI extensively. A small group, 4.71%, currently does not use AI at all.

These figures demonstrate that although interest and enthusiasm are high, the majority of institutional investors are still in the early stages of executing AI strategies.

Implications for the Future

This trend has significant implications for the investment landscape. First, capital is flowing rapidly into AI infrastructure and automation, creating a competitive advantage for those who adopt these technologies early. Second, the emphasis on general partners using AI suggests that investor expectations are shifting toward measurable implementation rather than theoretical adoption. Third, the gap between interest and full-scale deployment presents an opportunity for firms to develop a strategic edge by embracing AI thoughtfully and systematically.

For content leaders and writers following the investment sector, these developments offer rich narrative possibilities. They shed light on structural changes in funds, highlight the opportunities for infrastructure providers, and reveal the challenges in data quality, talent, and governance. They also provide insights into how different regions, such as India and the broader Asia-Pacific, may respond and adapt to these AI-driven shifts in capital allocation.