Blackstone earnings surge 26% as AI investments drive record profits

Blackstone reported Q2 distributable earnings of $1.98 billion, up 26% from a year earlier, driven by revenue from its artificial intelligence infrastructure investments.

"AI is reshaping every part of our portfolio, from private equity to credit to real estate," Jonathan Gray, president of Blackstone, said on the earnings call.

Revenue rose 36% to $5.04 billion. Fee-related earnings climbed 22% to $1.78 billion, or $1.43 a share. The infrastructure investing unit led with gross returns of 7.2%, outpacing the firm's other investment areas. Total assets under management increased 11% to nearly $1.35 trillion.

The results underscore Blackstone's bet that AI infrastructure will generate decades of investment returns. The firm is partnering with Broadcom Inc. and Apollo Global Management on a $35 billion platform to finance AI chip development, and with Google on a $5 billion equity-backed AI cloud venture.

Private Equity Gains From AI Stakes

Blackstone's private equity division holds stakes in SpaceX, which went public in June, as well as Anthropic and OpenAI, both of which could go public as early as this year. The division benefited from the firm's yearslong AI-related investments, contributing to stronger inflows in the quarter.

The private equity strength helped offset a slowdown in Blackstone's private credit unit, where inflows fell to $31 billion for the second straight quarter. The firm said it is not seeing a slowdown from institutional investors, which make up most of its investor base, but individual investors and their wealth managers have shifted to other private assets.

$35 Billion AI Infrastructure Platform

Blackstone's credit and insurance business is working with Broadcom and Apollo on a platform backed by an initial $35 billion to finance AI infrastructure. The deal, one of the largest private credit transactions ever arranged, will support the acquisition of Google-designed AI chips that Anthropic will lease to expand computing capacity.

Broadcom is providing residual value support for the senior debt tranches, a structure that helped secure investment-grade ratings. Morgan Stanley advised Broadcom on the transaction. Approximately half of the $35 billion package was distributed to other investors through syndication, according to people familiar with the matter.

The earnings raise signals that management expects AI infrastructure demand to accelerate. Investors will watch the Q3 earnings call for updates on the Broadcom-Apollo platform and the Google cloud venture.

This article is for informational purposes only and does not constitute investment advice.