Private markets are chasing two major growth opportunities at once: trillions of dollars in potential 401(k) allocations and the next wave of AI-driven investments beyond chips and data centers, according to EisnerAmper’s Nick Tsafos, Partner-In-Charge.

A proposal moving through Congress would create a framework for broader inclusion of alternative investments in employer-sponsored retirement plans, potentially opening a new channel of capital for private market managers.

Tsafos said firms should not wait for lawmakers to finalize the rules. Instead, managers should already be preparing the reporting systems, valuation processes and investor education materials needed to serve retirement investors.

"The opportunity is there," Tsafos said in an interview with Benzinga. "Advisers need to get their investment vehicles ready for the employee benefit market."

Unlike institutional investors, retirement plan participants will require greater transparency around private investments, including fees, performance, liquidity limitations and portfolio risks.

"I think what private equity and venture capital advisors need to understand is that they have to provide education to the person that knows the least," Tsafos said.

Critics of expanding alternatives into retirement plans have raised concerns about whether individual investors fully understand the risks associated with illiquid investments, particularly after recent volatility across parts of the private credit market.

The suitability of private market allocations will depend heavily on an investor’s timeline. Younger investors with decades until retirement may have more flexibility to allocate toward alternatives, while those closer to retirement may require more liquid assets, he added.

AI Investors Are Hunting for the Next Beneficiaries

Beyond retirement investing, Tsafos said private markets are also changing how they approach artificial intelligence opportunities.

While investors have poured capital into AI infrastructure, including chips and data centers, Tsafos said the next wave of opportunities may come from companies benefiting from AI adoption.

"Everybody talks about chips and data centers," Tsafos said. "But is that where you want to be focusing on right now, or do you want to start looking at who the beneficiaries are going to be of AI?"

Defense and healthcare are two areas where Tsafos sees significant potential.

In defense, AI is reshaping autonomous systems, including drones and other unmanned technologies. The technology is increasingly influencing real-time decisions, creating a cycle where offensive capabilities and defensive systems continue to evolve alongside one another.

Healthcare represents another opportunity as AI advances drug discovery, genetic research and personalized medicine. Tsafos pointed to AI’s role in analyzing human genome data and helping researchers develop more targeted treatments.

"Private equity is looking more into the beneficiaries of AI than AI itself," Tsafos said.

Private Equity’s Exit Strategy Is Changing

Tsafos also pointed to the growing use of continuation vehicles as evidence that private equity firms are embracing longer investment horizons. Higher interest rates have slowed traditional exits through IPOs and acquisitions, encouraging firms to hold assets longer and continue creating value before selling.

The rise of continuation vehicles has accelerated as private equity firms navigate a slower exit environment, according to recent data from S&P GLobal Market Intelligence. Global private equity continuation funds raised a record $62.67 billion in 2025, the highest annual total since at least 2017, while the number of closed continuation funds reached an eight-year high of 105 in 2025. Through May 8, 2026, continuation funds had already raised $11.86 billion across 20 vehicles.

The broader secondaries market has also expanded as firms look for alternatives to traditional sales. McKinsey estimated GP-led secondary transactions, which are largely driven by continuation vehicles, reached $115 billion in 2025, more than triple 2020 levels.

Continuation vehicles allow private equity firms to extend ownership of high-performing companies while providing liquidity to existing investors who want to exit. Tsafos said the trend reflects a broader shift in the industry as managers focus on maximizing portfolio company growth rather than rushing toward a sale.

"I think what’s happening is private equity and venture capital are realizing that a longer time period is providing a lot more value," Tsafos said.

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