Brookfield's Q3 2025: Contradictions Emerge on AI and Humanoid Investments, Carried Interest, and Liquidity Strategies

Date of Call: None provided

Financials Results

• Revenue: Distributed earnings (DE) before realizations: $1.3B for the quarter ($0.56 per share); $5.4B over the last 12 months ($2.27 per share), up 18% YOY.
• EPS: Total DE (including realizations): $1.5B for the quarter ($0.63 per share); $6.0B over the last 12 months ($2.54 per share); total net income $1.7B over same period; quarterly dividend $0.06 per share.

Guidance:

• Expect continued growth in results over the remainder of 2025 and into 2026.
• Oaktree acquisition expected to close in H1 2026 (subject to customary approvals); corporation to fund ~$1.4B of the transaction.
• Just Group acquisition (UK) on track to close in H1 2026; insurance assets expected to grow by ~ $40B to $180B upon closing.
• Record deployable capital (~$178B) to be invested into AI infrastructure, energy transition, and real estate.
• Quarterly dividend declared of $0.06 per share payable end of December.

Business Commentary:

* Strong Financial Performance: - Brookfield Corporation reported distributed earnings of $1.3 billion for Q3 2025, or $0.56 per share, and $5.4 billion over the last 12 months, representing an 18% increase over the same period last year. - The growth was driven by strong organic earnings growth across underlying businesses, supported by healthy economic activity and corporate earnings.

• Real Assets and AI Infrastructure:
• Brookfield is positioning itself to invest
  
  $180 billion of deployable capital into powerful secular trends, including AI innovation, aging populations, and real estate recovery.

• This investment strategy is aligned with growing demand for large-scale infrastructure and services, leveraging Brookfield's global reach and expertise.

• Wealth Solutions Expansion:

• The Wealth Solutions business delivered distributed earnings of $420 million in the quarter, with organic growth over 15% year-over-year.

• Growth was supported by strong investment performance and disciplined capital deployment, with expansion into fast-growing retirement markets in the UK and Japan.

• Asset Monetizations and High-Quality Assets:

• Brookfield advanced $75 billion of monetizations across various asset classes in 2025, with substantial value realized in real estate, infrastructure, and renewable assets.
• The favorable market conditions for high-quality assets and businesses have allowed for strong transaction activity and attractive returns.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly described results as "another strong quarter," highlighted an 18% YOY increase in distributed earnings, record deployable capital of ~$178B, $75B of monetizations YTD, and said they "expect continued growth" into 2026 — indicating constructive business momentum and a positive outlook.

Q&A:

• Question from Michael Cyprus (Morgan Stanley): How do you see humanoids and AI broadly potentially creating another leg of the stool for Brookfield over time, and can you unpack components of the 2030 DE guide (e.g., ~$2.6B from capital allocation)?
  Response: Primary focus is building AI backbone infrastructure—data centers and power (renewables, nuclear); Figure/humanoids are strategic, defensive investments to learn and selectively deploy, complementing the franchise rather than immediately constituting a separate standalone leg.

• Question from Michael Cyprus (Morgan Stanley): Follow-up on Wealth Solutions: describe the Japan reinsurance arrangement, its scope, and global ambitions beyond the UK transaction.
  Response: The Japan deal is a flow reinsurance agreement that will scale over time via monthly/quarterly flows and partnerships with local players; Brookfield is focused on expanding in the UK and Japan as primary international priorities alongside North America.

• Question from Mario Saric (Scotia Bank): How long to reach the ~200bp net investment yield spread target, and how should we think about gross vs. net insurance flows (net was ~40% of gross this quarter)?
  Response: 200bps is a medium-to-long-term target achieved via patient, disciplined deployment (barbell approach); focus remains on ROE (~15% target); gross/net flows should stabilize to about one-third outflows versus inflows per quarter.

• Question from Mario Saric (Scotia Bank): Regarding the Oaktree acquisition, has the composition of the ~$3B consideration between BN shares, BAM shares and cash been settled, and will it impact BN share repurchases?
  Response: Elections finalized: roughly $250M of BN shares elected, the balance in cash (BAM consideration mostly cash); transaction will have no impact on broader buyback program—we will repurchase the issued 250M shares.

• Question from Alex Blostean (Goldman Sachs): On the insurance spread (165bps this quarter), what is the near-term trajectory over the next 12–24 months as you earn back toward targets?
  Response: Current 165bps reflects disciplined, patient deployment with inflows parked in cash; as capital is invested into higher-yielding real assets and credit opportunities, the spread should widen toward targets—focus remains on long-term ROE rather than quarter-to-quarter spread moves.

• Question from Alex Blostean (Goldman Sachs): Progress toward closing the Just acquisition and what it could mean financially/strategically for accelerating presence in UK/Europe and PRT markets?
  Response: Shareholder approval secured; working with UK regulator (PRI) and expect close in H1 2026; Just has historically originated ~£5B of PRT, which Brookfield expects to scale but pro forma financials remain withheld until regulatory progress.

• Question from Sherilyn Radbourne (TD Cowan): For the US nuclear framework, what downside protections would Brookfield seek when investing capital, and will investment occur via a discrete nuclear strategy or within BGTF?
  Response: The $80B US program is being executed through Westinghouse (owned by BGTF One); Brookfield's role centers on delivering facilities and providing fuel/services — any direct involvement will be structured with downside protections and done through Westinghouse/BGTF One rather than an ad hoc risky exposure.

• Question from Sherilyn Radbourne (TD Cowan): On potential South Carolina plans, how might those be structured?
  Response: Early stage, but any involvement will prioritize downside protection and be structured to limit downside exposure while supporting Westinghouse services or Brookfield capital where appropriate.

• Question from Kenneth Worthington (JPMorgan): How is Kerry Generation shaping up for 2026 given improving M&A and realizations, and how do realizations on the balance sheet vs. funds look for the intermediate term?
  Response: Outlook unchanged from Investor Day: 2025 a transition year with expected step-up in carried interest in 2026–2028; funds and balance-sheet monetizations operate independently, capital markets are stronger, and monetization activity is expected to continue into next year.

• Question from Bart Dizierski (RBC Capital Markets): Real estate NOI/FFO in the LP ticked up materially this quarter — what drove that step-up?
  Response: The quarter benefited from disposition gains from monetizations, which drove the increase in FFO/NOI for the LP portfolio.

• Question from Bart Dizierski (RBC Capital Markets): Follow-up — will Target Carry increase materially once the Oaktree acquisition closes?
  Response: Owning more of Oaktree will raise Target Carry modestly because of greater carry-eligible capital, but the increase will not be material to current targets.

• Question from Sohrab Mobahedi (BMO): Of the three macro policy scenarios discussed (faster growth, austerity, quietly managing rates below inflation), is any one environment materially better for fundraising?
  Response: Demand for real asset alternatives has remained strong across cycles; while lower nominal yields could be incremental upside, Brookfield expects strong fundraising regardless and is not changing plans based on scenario.

• Question from Dean Wilkinson (CIBC World Markets): As the business scales, is there concern about the law of large numbers limiting returns or the ability to deploy capital?
  Response: Management sees no near-term shortage of high-quality, large-scale opportunities (AI infrastructure, renewables, etc.) and believes the opportunity set will support continued sizeable deployments without compromising returns.

• Question from Jamie Gloin (National Bank): Wealth Solutions annuities DE stepped down a bit quarter-over-quarter and investment yield fell ~10bps — what's driving that?
  Response: No material issue — small movements and sizable inflows being temporarily parked in cash until selectively invested; the yield/ spread dip reflects cash holding prior to deployment, and management is being patient to secure appropriate real asset investments.

Contradiction Point 1

Artificial Intelligence (AI) and Humanoid Investment Strategy

It highlights a shift in the company's strategic focus on AI and humanoids, potentially impacting long-term investment decisions and market positioning.

How could humanoids and AI serve as another pillar for Brookfield in the future? - Michael Cyprus (Morgan Stanley)

2025Q3: We are investing in building the backbone infrastructure to support AI's growth, focusing on renewable energy, nuclear, and data centers. We are also selectively deploying capital in AI and humanoids as both a defensive investment and to stay ahead of the curve, benefiting our organization. - Nick Goodman(CEO)

On the AI infrastructure strategy, will there be cornerstone investors, and how will you address technological obsolescence risk? - Cherilyn Radbourne (TD Cowen)

2025Q2: We have begun building the backbone infrastructure for AI, including data centers, microelectronics, and semi-autonomous vehicles, which will be transformational for our business. - Nicholas Howard Goodman(CFO)

Contradiction Point 2

Carried Interest and Capital Markets

It involves changes in financial forecasts, specifically regarding carried interest expectations, which are critical indicators for investors.

How long to achieve the 200 basis point target net investment yield spread? - Mario Saric (Scotia Bank)

2025Q3: We are seeing very strong carry execution, and we are going to see a material step-up in our results in the second half of the year that substantially exceeds what we saw in the first half. - Nick Goodman(CEO)

Is the current market environment favorable enough to accelerate carry expected for 2026 and 2027 to the second half of this year? - Kenneth Brooks Worthington (JPMorgan)

2025Q2: I believe we are ahead of schedule in terms of transaction activity. We had a great year. We had an excellent year in 2024, $55 billion of asset sales year-to-date. - Nicholas Howard Goodman(CFO)

Contradiction Point 3

Liquidity and Share Repurchase Strategy

It highlights differing perspectives on the impact of the Oaktree acquisition on liquidity and share repurchase strategies, which are crucial for investor assessment of the company's financial management.

How will the Oaktree acquisition affect share repurchase speed? - Mario Saric (Scotiabank)

2025Q3: The acquisition will not impact share repurchases. We will buy back the 250 million shares issued to fund it, but the broader buyback strategy remains unchanged. - Nick Goodman(CFO)

How do funding agreements as a source of funds differ from straight-up annuities and pension risk transfer deals in terms of liability characteristics, and who are the typical counterparties? - Cherilyn Radbourne (TD Cowen)

2025Q1: We'll continue to generate cash flow from operations and will be able to fund the buybacks and fund the deals that we're going to do. I think it's important to understand, it's not a choice between the 2. We can do both. - Bruce Flatt(CEO)

Contradiction Point 4

Carried Interest Realization and Cash Flow Projections

It involves the expected timeline and magnitude of carried interest realizations, which are significant for financial forecasting and investor expectations.

How long will it take to reach the 200 basis point net investment yield spread? - Mario Saric (Scotiabank)

2025Q3: Carried interest realizations are expected to increase significantly starting in 2026 and 2027, following a bridge year similar to 2024 and 2025. - Nick Goodman(CEO)

What are the expectations for realizing carried interest and the $20 billion cash flows over 10 years, particularly in 2025? - Robert Kwan (RBC Capital Markets)

2024Q4: Carried interest realizations are expected to increase significantly starting in 2026 and 2027. - Nicholas Goodman(CFO)

Contradiction Point 5

Investment Strategy and Monetization Opportunities

It involves the company's approach to monetization and investment opportunities, which are crucial for capital allocation and growth strategies.

What are the drivers of the increase in NOI for the LP portfolio this quarter? - Bart Dizierski (RBC Capital Markets)

2025Q3: We are opportunistic without relying on monetizations for acquisitions. Our significant capital availability and liquidity allow us to be flexible and pursue attractive investment opportunities. - Nick Goodman(CEO)

Do you prioritize asset monetization before investing, or is the approach more opportunistic and capital-driven? - Sohrab Movahedi (BMO Capital Markets)

2024Q4: We are opportunistic without relying on monetizations for acquisitions. Our significant capital availability and liquidity allow us to be flexible and pursue attractive investment opportunities. - Nicholas Goodman(CFO)