AI's Integration Into Alternative Data Fuels New Opportunities And Challenges

Executive Summary

As the integration of alternative data with artificial intelligence (AI) systems accelerates, investment firms are experiencing both expanded opportunity and heightened responsibility.

AI is proving highly beneficial in surfacing new signals, streamlining research, and unlocking new sources of alpha from complex, high‑velocity datasets. At the same time, its use is heightening firms' exposure to model risk, governance gaps, and evolving data rights— requiring firms to implement disciplined controls, auditable decisioning, and a clear data provenance strategy to effectively translate innovation into durable performance.

These conclusions are based on Lowenstein Sandler's latest survey of investment advisers at private fund managers (private equity firms, hedge fund managers, and venture capital firms). Since 2019, the firm has conducted an annual survey (except in 2020) to understand the role of alternative data in the investment community.