2025 Global Risk Report

Blind Spots: High Tides of Ambition and Undertows of Risk

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1. AI digital infrastructure 2. Higher energy costs 3. Industrial overcapacity in China

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 partnered with Bloomberg Media to uncover emerging risk scenarios using its proprietary AI tools. These tools analyzed a wide range of sources — including earnings call transcripts and news trends from the Bloomberg Terminal — to identify potential blind spots in today’s environment.

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.

 

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Chapter 1

Is the AI infrastructure splurge overdone?

Even amidst rapid growth and corresponding economic tailwinds, investors might be overestimating short-term returns from AI and underestimating long-term digital infrastructure needs. As the future of AI evolves, investors must seek out strategies where long-term conviction is emerging.

Chapter 2

Are energy costs bound to rise?

A new regime of higher-for-longer energy costs—from raw materials to the electricity rates that end users pay—would raise implications for the macro outlook and a range of asset classes and sectors, including infrastructure and emerging technologies.

Chapter 3

China’s Industrial Overcapacity and its Role in Global Inflation

China’s industrial overcapacity could serve as a significant deflationary force and a threat to markets that face an excess supply of Chinese goods. These risks might be flying under investors’ radar amid more persistent fears that tariffs will create inflationary impulses, particularly in the U.S.

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Blind Spots: High Tides of Ambition and Undertows of Risk

Investors must look beyond prevailing narratives to capture alpha and manage risk.
Download PGIM’s 2025 Global Risk Report today to explore underappreciated risks to portfolios.

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Webinar Replay

Exposing Overlooked & Interconnected Risks in AI, Energy, and Trade

PGIM experts explain strategies that seek to capture alpha while effectively managing risk beyond prevailing narratives, anticipating unexpected outcomes that aren’t yet priced into markets. This webinar discusses overlooked and interconnected risks associated with the themes of this year's report.

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The key themes text above is AI-generated and have been reviewed for accuracy.