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Capital Markets — industry outlook

  • Period: 2026-10-19 to 2026-11-09
  • Events: 34
  • Generated: 2026-11-09T07:30:00.003Z

Accelerated AI Infrastructure Investment and Power Constraints

Companies are aggressively pivoting capital expenditures toward AI-driven data center infrastructure, driven by a "power bottleneck" rather than chip supply. Management expects power demand through 2028–2030 to remain "extremely strong" with supply being scarce, forcing a shift from speculative "neocloud" models to energy infrastructure assets.

  • Galaxy Digital (GLXY) projects a data center revenue run rate of $800–850 million by 2027, with Phase 2 energization targeted for mid-2028; it expects capital expenditures to ramp significantly in the first half of 2027.
  • Riot Platforms (RIOT) outlined a leasing revenue ramp from ~$23M (2026) to ~$250M (2027) and ~$1.8B (2028), with total project capital estimated at ~$7.6B–$7.8B for its Corsicana and Rockdale sites.
  • TeraWulf (WULF) secured a $19 billion 20-year lease with Anthropic, projecting over $700 million in annualized revenue starting next year from its Lake Mariner facility; it targets a total campus scale of ~750 MW to accommodate future phases.
  • TradeWeb Markets (TW) anticipates "AI build-out" to drive significant revenue in 2027 and beyond, viewing AI as a "structural secular trend" that will compound regardless of issuance cycles.
  • AtkinsRéalis (ATK) notes that AI data centers are creating new engineering opportunities, with the company positioning itself for larger engagements in power and cooling infrastructure.
  • Toromont Industries (TOF) reports strong demand visibility through 2028–2029 for power systems and enclosures driven by data center needs.

Divergent M&A and Restructuring Cycles in the Advisory Space

A bifurcation is emerging where Strategic M&A and restructuring are decoupled from traditional capital markets cycles, driven by debt maturity walls, software sector stress, and the need for scale.

  • Moelis & Company (MC) and Perella Weinberg (PWP) both cite software sector dislocation as a primary driver for restructuring, with Moelis noting debt maturities in software creating opportunities for work in 2027–2028. Perella Weinberg expects ~70 mega-cap transactions in 2026 but sees the primary growth driver in the $1B–$5B segment.
  • Lazard (LAZ) projects its 2027 weighted pipeline is more than double the level at the same time in 2025; it anticipates a "significant uptick" in private equity M&A as valuation disconnects resolve.
  • Stifel Financial (SF) expects a rebound in Q4 2026 and further recovery in 2027, driven by post-election repositioning and a secular uptick in depository M&A.
  • Houlihan Lokey (HLI) and Evercore (EVR) both identify a 2028–2029 debt maturity wall as a structural catalyst for restructuring and liability management, with Evercore expecting "significant buildup" of opportunities.
  • JPMorgan Partners (PJT) expects the M&A market to be the second-best year on record for 2026, entering 2027 with a "meaningfully improved pipeline," though conversion rates remain lower than historical peaks.

Margins Under Pressure from AI and Infrastructure Build-Outs

Most firms expect margin expansion to be "muted" or face compression in the near term due to necessary heavy investments in AI, compute infrastructure, and personnel, contrasting with previous high-growth periods.

  • TradeWeb Markets (TW) expects incremental margin expansion to be more muted than in 2025 due to increased investments in AI and international growth; Q3 tech costs were up 31.8% YoY.
  • Virtu Financial (VIRT) anticipates continued incremental investment in physical capital (compute, power, storage) to maintain a technological "arms race," noting rising costs of AI and compute.
  • Lazard (LAZ) projects that 2027 will see the acceleration of compensation expense recognition (if deferral rates are reduced), raising the 2026 compensation ratio by a few percentage points before improving in future years.
  • PJT Partners (PJT) targets a 66.5% adjusted compensation ratio for FY2026, with non-compensation expenses projected to remain consistent with current run-rate levels.
  • Coveo (COV) acknowledges that while bookings are strong, revenue recognition lag and "responsible" guidance reflect the need to account for renewal dynamics and AI implementation costs.
  • Virtu Financial (VIRT) and Moelis (MC) both note that AI investment costs will sustain or increase non-compensation expense levels through 2027 before efficiency gains fully materialize.

Capital Returns and Balance Sheet Discipline

In an environment of elevated interest rates and selective financing, firms are prioritizing debt repayment, share buybacks, and organic growth over high-multiple M&A.

  • TradeWeb Markets (TW) maintains $125 million in remaining share repurchase authorization and intends to offset dilution at current share price levels.
  • Lazard (LAZ) intends to continue buybacks through the remainder of the year after $33 million in Q3 repurchases and targets a "J-curve" reversal in capital allocation.
  • Stifel Financial (SF) has 6.2 million shares remaining under its buyback authorization and views its $360 million excess capital as a buffer for growth and returns.
  • Galaxy Digital (GLXY) secured $200 million in additional buyback authorization (on top of $200 million used in 2026) and expects Phase 3 to be fully equity-funded via balance sheet resources.
  • Boardwalk REIT (BWO) repurchased $245 million in 2026 and views the gap between public market price and private valuations as an opportunity for NCIB.
  • TeraWulf (WULF) plans to recycle equity from stabilized assets in 2027 and uses project-level debt to preserve equity value, avoiding dilutive issuances.

Emerging Market Electronification and Product Innovation

Traditional voice/chat workflows in fixed income and credit are viewed as having "substantial runway" for electronic automation, with specific new product launches and acquisitions targeting this shift.

  • TradeWeb Markets (TW) views 30% of the cleared swaps market as electronified and anticipates compounding growth as workflows shift to electronic, automated, and AI-driven systems over the next 10 years. It plans to pay $1.89 billion in cash to acquire TruMid to expand into the credit new issue space.
  • Miami International Holdings (MIAX) expects retail financial futures growth to mirror retail options, with additional retail brokerage platforms launching in Q4 2026 and a 10% increase in access fees effective January 1, 2027.
  • Marex Group (MRX) is developing "compute futures" and hedging products for compute power, and expects cross-margining for U.S. Treasury futures to generate a run-rate revenue contribution of $15–20 million.
  • Spin Master (SSS) anticipates Hellbreak (strategic trading card game) to go live to consumers in January 2027 and plans to expand StickerBox distribution in the second half of 2027.

Sector-Specific Headwinds: Rates, Tariffs, and Valuation Gaps

Companies cite specific macro and regulatory headwinds, including valuation disconnects in private equity, tariff uncertainties, and elevated interest rates affecting specific sub-sectors.

  • Lazard (LAZ) notes that private equity M&A is currently suppressed by a valuation disconnect and expects this to resolve leading to a significant uptick; it also anticipates a potential shift in the U.S. administration in 2028 could alter the antitrust regulatory landscape.
  • Spin Master (SSS) and Defi Technologies (DEFT) (Cascades) both cite tariff headwinds, with Spin Master incurring a ~$30 million tariff impact in 2026 and Cascades facing a less than $10 million annual direct impact from Section 338 classifications.
  • Stifel Financial (SF) and Marex (MRX) both highlight higher interest rates as a factor compressing net interest income (NII) or increasing funding costs, though Stifel views itself as "rate agnostic" for transactional business.
  • Perella Weinberg (PWP) warns that a "gap step up" in interest rates could impact valuations violently for highly levered transactions, while Lazard notes higher rates are not a material deterrent to large-cap strategic M&A.