Blackstone's Q2 distributable earnings rose 26% to $2B, topping analyst views. CEO Schwarzman said the firm is 'mindful' of 'excessive exuberance' in AI investments.
Blackstone’s second-quarter earnings topped analyst estimates. The private markets giant reported distributable earnings of $2 billion, or $1.52 a share, up 26% from a year earlier. Analysts had expected $1.7 billion.
CEO Stephen Schwarzman, 79, pointed to the firm’s earlier investments in data centers, energy, power and AI companies as the quarter’s biggest driver. He also said the firm has been selective in pouring capital into the AI infrastructure boom.
“In terms of risks, we’re mindful of the potential for excessive exuberance in this area, and we’ve carefully chosen our spots, leveraging our scale and knowledge advantage to build conviction,” Schwarzman said on the post-earnings call.
He compared AI’s eventual impact to the commercialization of electricity and the industrial revolution, with the caveat that it would arrive faster and with more complexity. “Major change of this type also creates anxiety due to the uncertainties of how the technology will evolve,” he said. “We will need to monitor these developments as a society and course correct when necessary.”
Blackstone closed several large AI-adjacent deals in the quarter. Its credit and insurance business launched a $35 billion investment platform with Broadcom and Apollo Global Management. The platform aims to lower compute and power costs for training AI models. In May, the firm also launched an AI cloud provider in partnership with Google parent Alphabet. Apollo Global Management, which carries an Alpha Score of 42/100 (Mixed) in AlphaScala data, is a partner in that platform.
Alphabet’s stock page shows an Alpha Score of 70/100 (Moderate).
The infrastructure division within Blackstone’s private equity unit was the firm’s best performing major strategy. It grew 7.2% in the quarter and 28.6% over the trailing twelve months through June. Blackstone also manages private equity funds holding stakes in SpaceX, Anthropic, OpenAI and CoreWeave – core companies in the AI buildout.
Nearly $200 billion of data center deals have been completed in private markets since early last year, Goldman Sachs estimates.
Yet the quarter that produced the earnings beat also showed strain in Blackstone’s private credit business. Investors asked to pull $4.4 billion, or 10% of their shares, from the firm’s flagship private credit fund, Bcred, in June. Blackstone capped withdrawals at 5% after allowing full redemptions in the first quarter.
Net realizations in the credit and insurance division dropped 95% year over year to $3 million. That division’s contribution to earnings fell 6% from the same period.
Blackstone’s stock slipped on Thursday. It is down more than 20% since the start of January.
“Our stock is on sale today,” Schwarzman said.
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