Blackstone's president says AI buildout will take time but returns will come. Firm's data center investments drove 11% PE revenue growth in Q2.
Jon Gray has a message for investors fretting over the pace of AI returns: wait.
The Blackstone president and chief operating officer said concerns about the AI buildout are overblown. "I think the impatience is a little misplaced. It takes some time for the applications to happen," Gray said on the firm's podcast, which aired July 30.
The comments come after a turbulent July for AI-linked stocks. Chipmaker shares were hit by jitters in Asian markets. Meta and Alphabet each fell after raising yearly AI spending forecasts. Investors have grown skeptical about the scale of hyperscaler capital outlays.
Gray acknowledged that some capital will be misallocated. "I'm not going to discount that there's not going to be misallocations of capital. There are people who are doing things that may not turn out to have high returns," he said. Still, he described AI as a "new operating system for the global economy" that will eventually work its way through many business areas.
Blackstone is the world's largest data center investor. Gray said a single data center creates a ripple effect of economic activity, requiring investments in chips and power. The firm's biggest deals in the second quarter all touched the AI buildout, from chips to semiconductors to data centers. In June, Blackstone bought the Hyatt Regency in San Francisco for $279 million, about $340,000 per room, according to the seller's press release.
Revenue for Blackstone's private equity portfolio grew 11% in the second quarter. Gray said AI investments drove that result. The growth, he said, "has got a long way to run."
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