Financial executives lay out duelling AI bubble viewpoints

Blackstone Inc. President Jon Gray said investors don’t need to fear that the boom in AI will turn into a bubble, just days after billionaire Ken Griffin said he fears the industry was “almost certainly” headed in that direction.

“When you think about a bubble, you think about building capacity and then hoping the demand comes,” Gray said in an interview with Bloomberg TV Thursday after the company reported its third-quarter results. “With AI, you’re building capacity, and you’re hoping you can keep up with the demand.”

It’s “a very different dynamic” from phenomena such as the 1990s telecom bubble, he said. Gray pointed to an AI consulting firm Blackstone created with Anthropic PBC called Ode.

“We can’t keep up with customer demand,” he said. “Demand is almost parabolic.”

Gray, 56, is making AI the biggest bet of his career, having amassed a US$200 billion data-centre empire and embedded AI into the hundreds of businesses Blackstone controls. On a call with analysts Thursday, the company said that AI-related holdings represent about seven per cent of its roughly US$1.4 trillion of assets under management.

But with the massive amount of spending going into data centres, some investors have likened the exuberance over AI to the lead-up to the dot-com crash. Earlier this week, Ken Griffin said that many companies are still confronting the implications of AI, including how much they will spend on the technology and how it might affect the economy.

Other finance executives have pushed back on Griffin’s comments about it being close to a bubble. After Griffin’s comments, Deutsche Bank AG chief executive Christian Sewing said he sees no reason to worry about a sharp reversal in asset prices any time soon.

For its part, Blackstone is focusing on build the infrastructure and long-term assets needed to power the AI boom, according to Gray. Speaking to Bloomberg, he acknowledged that so-called neoclouds — AI-first cloud computing providers such as CoreWeave Inc. — have been struggling to obtain adequate financing. Shares of CoreWeave plunged about 25 per cent last week as rising bond yields sparked concerns over its debt-fuelled expansion.

“The main business for the neoclouds is quite good,” Gray said. “I think these neoclouds will find sources of capital.”

CoreWeave, in fact, is one of the many ways Blackstone is plowing into AI. In March, CoreWeave announced that it had raised US$8.5 billion backed by a combination of chips and contracts with Meta Platforms Inc. Blackstone was an anchor investor.

The following month, Blackstone said it was folding its growth business into a new division dedicated to its AI portfolio. The new group, Blackstone N1, is led by veteran executive Jas Khaira. Blackstone has since partnered with Google to create Crux AI, a cloud business built on the Alphabet Inc. unit’s chips.

“We finance power, we finance chips, we’ve done transmission — we’ve done all the various components of the whole ecosystem,” Blackstone’s Gilles Dellaert, the global head of the firm’s credit and insurance business, previously told Bloomberg.

—With assistance from Dani Burger.