Summary

The article examines how artificial intelligence is driving unprecedented investment in physical infrastructure, including data centers, energy, and engineering, while increasing interest in expanding private-market investments into 401(k) retirement plans. Drawing on experiences from the 2008 financial crisis and the engineering industry’s transformation, it argues that investors should focus less on whether AI is a bubble and more on understanding the transparency, valuation, and ownership of the assets held in their retirement portfolios. The article emphasizes that expanding investment opportunities should be accompanied by clear disclosures that help retirement savers make informed decisions.

What Do We Call Texas Now?

By Mustafa Tameez
JUL 21, 2026

A few weeks ago, I finished Andrew Ross Sorkin’s 1929. The book is ultimately about what happens when investors stop understanding what they own. That same discomfort is starting to appear in a very different place: the physical infrastructure powering artificial intelligence.

Markets can survive losses, recessions, and even bubbles. What they struggle to survive is uncertainty. Once investors begin to doubt the value of the assets in front of them, or question whether anyone else understands those assets either, confidence can disappear quickly.

That lesson stayed with me because I had seen a smaller version of it years earlier.

In 2009, I represented the Harris County-Houston Sports Authority. One of the issues we faced involved MBIA, a company few people outside finance had ever heard of. MBIA insured municipal bonds while also guaranteeing mortgage-backed securities and other structured financial products tied to the housing market. Its AAA credit rating allowed its guarantee to serve as a foundation for complex financing structures, enabling more debt to be issued because investors and lenders assumed its backing was secure. As losses from the housing crisis mounted, MBIA lost its AAA credit rating. Because of MBIA’s downgrade, $125 million in variable-rate bonds associated with one of Houston’s major sports venues entered an accelerated repayment schedule, making the debt due in 2014 rather than 2030. A crisis that began in the market for mortgage-backed securities on Wall Street was suddenly affecting a public institution in Houston.

That experience changed how I think about financial systems. Some of the most consequential risks travel through connections most people never see until something breaks. I have been thinking about that lesson again as private capital moves aggressively into AI data centers, power, and transmission.

For well over a decade, I have served with the Transportation Advocacy Group in Houston. I chaired the organization for several years, remain on its board, and am helping launch the TAG Leadership and Policy Institute. Through Outreach Strategists, I also lead our Transportation and Infrastructure practice.

Those roles have allowed me to spend years with leaders of engineering firms throughout Texas and across the country. Over that time, I watched private equity quietly transform the industry.

Independent engineering firms became acquisition targets. Regional firms grew into national platforms. Companies that had spent decades building local relationships suddenly became part of much larger organizations backed by institutional investors.

The story was not simply about private equity looking for acquisitions. It was also about succession. Many firm owners were approaching retirement, while the next generation of engineers was often unable or less interested in taking on the financial responsibility of buying the business. Selling to a larger platform gave owners a way to realize the value of what they had built while providing employees with continuity, access to larger projects, stronger management systems, and opportunities beyond a single local office.

The trend had already begun, but the Bipartisan Infrastructure Law strengthened the investment case by creating years of visible demand. Private equity-backed firms accounted for 12 percent of American engineering acquisitions in 2016 and 39 percent in 2023. Among the nation’s 100 largest engineering firms, the private equity share rose from 4 percent to 22 percent over the same period.

Engineering firms did not suddenly become smarter or more innovative. The market around them changed, and they found themselves sitting in the path of years of federally supported investment.

Capital responded predictably. Investment firms bought companies, combined them, expanded their capabilities, and prepared them for future sales. That was a rational response to opportunity, but watching it happen taught me something I had not fully appreciated before.

Public policy does not simply shape demand. It also shapes ownership.

Today I believe we are watching a familiar pattern unfold on a much larger scale with artificial intelligence. We saw it with engineering firms after the infrastructure law. Most people experience AI as software, but every advance depends on enormous physical infrastructure: data centers, electricity, transmission lines, cooling systems, semiconductors, engineering, construction, fiber optics, water, and land.

In 2025, Blackstone said its global data center platform was worth approximately $85 billion, with a development pipeline capable of supporting more than $125 billion in future growth. Brookfield has since launched a program intended to invest as much as $100 billion across AI infrastructure, including energy, land, data centers, and computing capacity.

Most public discussion focuses on what AI will do. Far less attention is paid to who will own the businesses and physical systems that make it possible.

To answer that question, it helps to understand one simple feature of private equity. These firms eventually have to sell.

They raise money from investors, acquire companies, try to make those companies more valuable, and then look for buyers. Without buyers, investors do not receive cash distributions. Without successful exits, it becomes harder for the firm to raise its next fund.

Private credit adds another layer to the picture. Companies owned by private equity increasingly borrow from private lenders rather than relying only on traditional banks. A retirement investor could eventually hold both the equity and the debt of the same underlying company through different funds, creating concentration that may look like diversification.

That exit pressure is important context for the growing push to open private markets to retirement savers. In August 2025, President Trump signed an executive order directing federal agencies to facilitate access to private equity, private credit, infrastructure, and other alternative assets through 401(k)s and other defined contribution plans.

There is a legitimate case for expanding access, especially as more companies remain private during their fastest years of growth. For decades, pension funds, university endowments, sovereign wealth funds, and wealthy families have invested in companies before they reached the stock market. Individual investors often arrived much later, after much of the growth had already occurred.

Larry Fink, the chief executive of BlackRock, has argued that private markets can improve retirement outcomes when incorporated responsibly into professionally managed funds. BlackRock is already developing strategies that combine public and private assets while addressing concerns about fees, liquidity, and transparency.

If a growing share of the economy remains private, retirement savers should not automatically be excluded from its growth. But opening private markets would also give fund managers access to an enormous new pool of potential buyers at a time when many need more reliable ways to sell or refinance their holdings. Broader access may still make sense, but investors should understand what it offers sellers as well as buyers.

For nearly a century, American capital markets have operated under a remarkably simple bargain. If you wanted access to the public’s money, the public deserved access to your information.

Public companies disclose audited financial statements, report earnings, identify significant risks, and trade in markets where prices are continually tested. Investors can usually sell when they choose.

Private markets operate differently. They disclose less, their assets are not continuously priced, and investments may remain locked up for years. Large institutions understand those tradeoffs because they negotiate access to information and employ teams of analysts. Most retirement savers do not.

For nearly a century, public disclosure has been the price of admission to America’s capital markets. If private assets are sold broadly through retirement products, investors should receive clear information about valuation, fees, leverage, liquidity, and the underlying holdings.

The Securities and Exchange Commission’s Investor Advisory Committee has recommended clearer valuation information, stronger liquidity disclosures, and additional protections as retail access expands.

The mortgage crisis offers a useful warning. The central problem was not simply that housing prices fell. Mortgages of different quality were pooled and repackaged until investors could no longer identify where the weakest risks were hiding. When buyers stopped trusting the packages, the market froze.

Private funds are not mortgage-backed securities, and AI companies are not subprime mortgages. The products are different, but the concern is familiar: when assets are pooled, privately valued, and difficult to examine, investors may struggle to see where the weakest risks are concentrated.

If private equity, private credit, and AI infrastructure move into 401(k)s and other retirement products, will savers actually be able to answer basic questions: How were these assets valued? How much debt sits underneath them? Do different funds hold different pieces of the same underlying businesses? And when can they get their money back?

None of this is an argument against private investment. It is simply a reminder that investors should be able to answer these basic questions.

Reading about 1929, remembering what happened with MBIA in Houston, and watching private capital reshape the engineering industry have all led me to the same conclusion. Access to new investment opportunities should not come at the expense of understanding what we own. Artificial intelligence will be one of the defining economic forces of our lifetime. The real question is whether we will protect the basic bargain that has long made American capital markets the deepest in the world: if you ask people to invest their savings, they deserve enough information to know what they are actually buying.

 

Frequently Asked Questions

Why does the article focus on 401(k)s instead of the AI bubble?

The article argues that the larger concern is not whether AI represents a market bubble, but whether retirement investors fully understand the private assets that may increasingly become part of their portfolios. Transparency and informed decision-making are presented as more important than predicting market cycles.

How is artificial intelligence connected to retirement investing?

AI requires massive investments in physical infrastructure, including data centers, electricity, transmission systems, semiconductors, and engineering services. As private investment grows in these sectors, retirement funds may gain greater exposure through alternative investment products.

What is private equity?

Private equity firms raise capital to acquire, improve, and eventually sell private companies. Unlike publicly traded companies, private businesses typically disclose less financial information and may have limited liquidity for investors.

Why are more private investments being considered for 401(k)s?

Supporters argue that many high-growth companies remain private longer than in previous decades, limiting access for individual investors. Expanding retirement plans to include private assets could provide broader investment opportunities while also introducing additional complexity and risk.

What risks should retirement investors understand?

The article highlights the importance of understanding how private assets are valued, the amount of debt associated with investments, liquidity restrictions, management fees, and whether multiple funds hold interests in the same underlying companies.

What does the MBIA example demonstrate?

The MBIA case illustrates how financial risks can spread through interconnected systems in unexpected ways. Events originating in one part of the financial market can ultimately affect public institutions, infrastructure projects, and local communities.

What is the article's main message for investors?

The article encourages investors to look beyond market headlines and focus on understanding the assets they own. As AI reshapes capital markets, maintaining transparency and informed decision-making remains essential for protecting long-term retirement savings.

Sources and Further Reading

VP’s Take

Dr. Michelle Cantú-Wilson, Vice President of Education & Workforce, Outreach Strategists:

“As new technologies reshape the economy, financial literacy becomes increasingly important. Understanding how retirement investments evolve alongside innovation helps individuals make informed decisions that support long-term financial security and prepares them to navigate a rapidly changing economic landscape.”