Rich families put their funds into AI over cryptocurrencies, JPMorgan

Rich families are putting their money into artificial intelligence instead of cryptocurrencies, according to new research from J.P. Morgan. The bank’s latest Global Family Office Report shows that nearly nine out of ten wealthy families have completely avoided digital currencies, while most say AI is their top investment pick.

The survey spoke to 333 single-family offices that manage money for wealthy families. On average, these families have a net worth of $1.6 billion. The findings show that 89% of them own no cryptocurrency at all. Those who do own some keep their crypto holdings below 1% of their total wealth.

Why digital currencies are being avoided

Family offices are ignoring Bitcoin and other digital currencies despite the recent hype surrounding them. They claim that cryptocurrencies lack sufficient regulations and are too difficult to comprehend. These families view cryptocurrency as a dangerous wager they don’t need to make because of concerns about inflation and the unpredictability created by international tensions.

While 65% of family offices say AI is a priority for the next few years, many haven’t actually put money into it yet.

More than half don’t own stakes in growth equity or venture capital funds, which is where AI startups get their early funding. Even more striking, nearly 80% have no money invested in the basic infrastructure AI needs to work, things like data centers, power plants, and energy systems.

Christophe Aba works as deputy head of investment and advice at J.P. Morgan Private Bank. He says investors need to think bigger. “To fully capture the AI opportunity, investors should look beyond the mega-cap leaders and focus on the enablers driving the supply chain, from semiconductors and power infrastructure to networking and cooling systems,” Aba said.

The top ten AI companies are already worth about $1.5 trillion combined, showing how much value exists outside the stock market in private companies.

Right now, family offices keep most of their money in familiar places. Public stocks make up 38.4% of their portfolios on average. Alternative investments like private equity, hedge funds, and commodities account for 36.8%. Some families worried about inflation put as much as 60% of their wealth into alternatives.

But they are also avoiding other assets. Nearly three-quarters own no gold. Infrastructure investments average just 0.7% of their portfolios. These choices show families prefer private equity and real estate, which they see as safer and more reliable over time.

Four approaches for AI investments

J.P. Morgan laid out four ways family offices can invest in AI:

1. Buy shares in big tech companies that are already using AI.
2. Invest in companies that supply the parts AI needs, like chip makers and energy providers.
3. Find businesses in different industries that are using AI to work better and faster.
4. Put money into private venture capital and growth funds that back AI startups.

The bank says these strategies fit well with how family offices think about money. They plan three to five years ahead and focus on technologies like cloud computing and data analysis.

But most families aren’t following through yet. Nearly six out of ten have no venture or growth investments at all.

Managing money gets more complicated

As families get richer and pass wealth to younger generations, managing everything becomes harder. More than 40% of families that own businesses say arguments and conflicts are a major worry. This pushes them to create formal rules and structures.

They’re also getting more help from outside. About 80% now pay other firms to manage at least part of their money. Among offices managing more than a billion dollars, over one-third farm out more than half their portfolio. Finding people with special skills, like knowing how to evaluate AI investments, makes hiring outside help necessary.

Elisa Shevlin Rizzo heads the family office advisory team at J.P. Morgan Private Bank. She points out the gap between what families say they want to do and what they actually do. Many talk about protecting against inflation and planning for the next generation, but their investment choices often stay stuck in old patterns.

The report shows wealthy families are being careful but ambitious. They are avoiding trendy sectors like space exploration, water projects, and entertainment. Instead, they focus on protecting wealth that needs to last for multiple generations. AI stands out because it offers clearer ways to make money than crypto’s ups and downs. The challenge now is turning interest into actual investments.

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