Leaning Into AI Is Paying Off, Blackstone's Gray Says

Summary

Jon Gray, Blackstone's President & COO, discusses the firm's strong Q2 earnings powered by its strategic pivot into AI infrastructure. He argues Blackstone stock is undervalued and offers cheap AI exposure, while data center demand is accelerating. Gray also highlights liquidity in non-AI businesses like logistics and fast food, cautions on software/services under AI disruption, and notes improving trends in private credit redemptions.

• Blackstone Q2 distributable earnings up 26%, driven by AI-related investments.
• Gray calls Blackstone one of least expensive ways to play AI; the stock is at a discount and should re-rate.
• Data center leasing demand exploding: on pace for 7 GW in 2026, with disciplined build-to-demand approach.
• AI compute shortage and Jevons Paradox mean lower costs will boost demand even more, requiring further energy/data center investment.
• Non-AI businesses like medical supply, fast food, and logistics are seeing good liquidity; Prologis named as potential M&A example.
• Software, professional services, and information services are under AI uncertainty with lower multiples and less deal activity.
• Energy prices elevated due to Middle East, but underlying inflation subdued, allowing Fed patience.
• Wealth franchise assets hit $324B; private credit redemptions falling materially, with flows expected to resume long-term.