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Current Price: $52.84
Dividend: $0.50
Brookfield Asset Management (BAM) delivered a strong second quarter, highlighted by record fundraising, double-digit fee-related earnings growth, and continued expansion of its AI infrastructure strategy.
While shares are no longer cheap, I believe BAM’s growing exposure to data centers, power generation, credit, and AI infrastructure could support a higher valuation over the long term.
Over the past year, it’s been a challenging environment for asset managers. Persistent inflation, higher-for-longer interest rates, and growing concerns surrounding private credit have weighed on investor sentiment across the sector.
Asset managers have also been impacted by weakness in software businesses facing potential disruption from rapidly evolving artificial intelligence technologies.
However, after reviewing Brookfield Asset Management’s (BAM) latest earnings, I believe the company is increasingly positioned on the other side of the AI trade.
Rather than facing disruption from AI, Brookfield is investing heavily in the physical infrastructure needed to support it.
And if second-quarter results are any indication, these investments could potentially help shares re-rate higher over the long term.
In this article, I discuss BAM’s latest earnings, fundamentals, expanding AI ecosystem, dividend safety, valuation, and why I continue to rate shares a Buy despite the post-earnings rally.
Previous Buy 📚
I last covered BAM in February after the company announced its $1.2 billion acquisition of industrial REIT Peakstone Realty Trust.
Despite shares struggling since the company’s spin-off from Brookfield Corporation (BN) in 2022, I remained bullish because of Brookfield’s investments in AI and cloud infrastructure, its nearly 4% dividend yield, robust financial position, and meaningful upside to my $76 price target.
Since then, BAM shares have climbed more than 9%, compared with approximately 13.4% for the S&P 500.
While BAM has slightly underperformed the broader market during that period, its latest earnings suggest growth is beginning to accelerate.
