We are at an inflection point in the AI market for PE companies and the AI race to deploy AI productively across all Portfolio Companies has finally started for real!

On one hand, AI models continue to double in performance/cost every 4-7 months, and more than $1B is invested every day in AI data centers to cope with sky-rocketing demand for tokens. On the other, the effective adoption within enterprises across the world is growing more modestly. The gap between what is technically possible to do today, and what is actually happening within companies is growing exponentially. This creates significant opportunities for disruption for faster moving start-ups and also the “least slowly” moving large enterprises in any industry.

But overcoming these execution barriers requires a deeper understanding of what is holding the people within the organizations back, and a different change management approach than what has traditionally worked for IT-driven transformations. In the last 6 months, however, we have seen a small groups of companies emerge that have managed to capture measurable benefits of AI at scale and a massive shift in the ecosystem, with PE companies and AI companies partnering with professional services firms in the race to unlock this value.

For PE companies, there are potential benefits of AI across the entire deal-lifecycle, from deal screening and diligence, to integration of new assets, but the real price - Portfolio Company EBITDA uplift during the holding period – has largely been lagging so far, beyond coding and enhancing products with AI. With the major investments of some of the largest PE Firms in the world, together with Anthropic and OpenAI, this is likely about to change rapidly. To analyze the opportunity at stake, and the real barriers holding back value-realization, KPMG has built digital twins of 17 million companies and successfully tested a new change management approach on 30+ companies in Europe.