Key Takeaways
- • Investor sentiment shows structural divergence: 86% of institutional investors surveyed remain optimistic about the next 18 months (down from 96% in early 2025), while 93% maintain confidence in the three-year outlook, revealing a bifurcated market prioritizing near-term resilience and long-term technology exposure.
- • AI has transitioned from growth lever to governance imperative: Investors now expect portfolio companies to demonstrate not only AI capabilities for competitive advantage but also formal AI governance frameworks, signaling a material elevation in how technology risk and strategic foresight are evaluated during due diligence.
- • KPMG survey of 302 U.S. institutional investors identifies "certainty of uncertainty" as defining market dynamic: The research reveals investors are recalibrating strategies to balance cautious near-term positioning against conviction in sustained technological impact, particularly artificial intelligence, as a durable growth engine.
- • Investment thesis pivots toward financial fundamentals and demonstrated resilience: In the near term, deal selection increasingly favors companies with strong balance sheets and operational resilience, a departure from growth-at-all-costs dynamics that characterized earlier market periods.
Summary
The private markets landscape in mid-2026 reflects a fundamental tension between near-term caution and long-term conviction. According to KPMG's latest Private Markets Pulse survey of 302 institutional investors across the United States, investor sentiment has moderated materially on near-term prospects while remaining constructive on three-year horizons. The data underscores what the research frames as the "certainty of uncertainty"—a market environment where robust long-term optimism coexists with tactical conservatism in the immediate term.
The survey results quantify this sentiment split precisely: optimism for the next 18 months declined to 86% as of July 2026, compared with 96% in early 2025, indicating a meaningful recalibration in investor expectations. Conversely, confidence in the three-year outlook remained resilient at 93%, demonstrating that longer-term conviction remains largely intact despite near-term headwinds. This divergence is not coincidental but rather reflects deliberate portfolio calibration by institutional asset managers responding to current market dynamics.
The primary driver of sustained long-term optimism centers on technological advancement, particularly artificial intelligence. Investors overwhelmingly attribute their three-year confidence to belief in AI's sustained and expanding impact on portfolio company performance and competitive positioning. Beyond this capability focus, however, the research reveals a critical evolution in how AI is evaluated: investors now expect portfolio companies to operate within formal AI governance frameworks, not merely deploy AI tools. This shift elevates technology risk management and strategic foresight to core components of investment due diligence, creating a new premium on companies that can demonstrate both technical competency and institutional governance discipline around AI deployment.
In response to this dual-timeframe environment, investors are recalibrating their near-term strategy by prioritizing companies with demonstrable financial resilience, strong balance sheets, and operational durability. This marks a departure from prior investment postures and reflects systematic repositioning toward fundamental value and defensive characteristics while maintaining aggressive exposure to technology as a long-term growth driver. The result is a more bifurcated portfolio construction approach, with cautious near-term stock selection balanced against decisive, conviction-driven bets on technology-enabled value creation over the three-year horizon.
The survey results quantify this sentiment split precisely: optimism for the next 18 months declined to 86% as of July 2026, compared with 96% in early 2025, indicating a meaningful recalibration in investor expectations. Conversely, confidence in the three-year outlook remained resilient at 93%, demonstrating that longer-term conviction remains largely intact despite near-term headwinds. This divergence is not coincidental but rather reflects deliberate portfolio calibration by institutional asset managers responding to current market dynamics.
The primary driver of sustained long-term optimism centers on technological advancement, particularly artificial intelligence. Investors overwhelmingly attribute their three-year confidence to belief in AI's sustained and expanding impact on portfolio company performance and competitive positioning. Beyond this capability focus, however, the research reveals a critical evolution in how AI is evaluated: investors now expect portfolio companies to operate within formal AI governance frameworks, not merely deploy AI tools. This shift elevates technology risk management and strategic foresight to core components of investment due diligence, creating a new premium on companies that can demonstrate both technical competency and institutional governance discipline around AI deployment.
In response to this dual-timeframe environment, investors are recalibrating their near-term strategy by prioritizing companies with demonstrable financial resilience, strong balance sheets, and operational durability. This marks a departure from prior investment postures and reflects systematic repositioning toward fundamental value and defensive characteristics while maintaining aggressive exposure to technology as a long-term growth driver. The result is a more bifurcated portfolio construction approach, with cautious near-term stock selection balanced against decisive, conviction-driven bets on technology-enabled value creation over the three-year horizon.
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