In a fast-changing world, typified by heightened economic and technological competition between great powers, underappreciated risks could upend the investment outlook. In PGIM’s fourth-annual Global Risk Report, we examine three risks that could alter the trajectory for interest rates, inflation, business investment, and the broader investment backdrop.

Key Themes

• AI infrastructure investment is surging, yet rapid innovation risks stranding assets and compressing returns. Investors must focus on resilient, inference-capable data centers close to end users.

• Skyrocketing energy demand from tech and manufacturing is driving persistent cost increases. Long-term opportunities favor regions with strong fuel supply and robust energy networks.

• China’s industrial overcapacity threatens to export deflation. Trade barriers may shift this impact across markets, intensifying global competition and creating opportunity for those who anticipate shifting trade flows.