Blackstone Connects Venture Capital to AI

Blackstone, the world's largest non-listed fund manager, is connecting risk capital with artificial intelligence (AI) investments. According to McKinsey, AI development needs $7 trillion in investments between 2025 and 2030, primarily for building data centers, installing technological equipment, and connecting to energy infrastructure. While much of this capital will come from public market investors and banks, Blackstone is also contributing through its private equity and credit funds.

Steve Schwarzman, Blackstone's president and CEO, believes that AI's potential change is on par with the industrial revolution and the introduction of electricity. Blackstone has positioned itself to benefit from this paradigm shift, becoming a major provider of private capital to the AI ecosystem. This includes growing its Quality Technology Services (QTS), which develops, owns, and operates data centers leased to major AI companies.

QTS has increased in value to $185 billion, including under construction facilities, and Blackstone believes it could double by the next few years. The company is constructing a facility in Calatorao, Zaragoza. In parallel, Blackstone has issued a vehicle, BXDC, raising $2 billion to develop data center infrastructure. In the energy sector, Blackstone has financed various companies, including a $5.3 billion credit line to Williams for supplying electricity to data centers.

Beyond real estate and infrastructure development, Blackstone has entered into agreements to finance companies directly involved in AI product and service development. For instance, it is one of the Wall Street firms supporting Nvidia's platform to raise $1 billion for building facilities housing its semiconductors. Additionally, Blackstone has signed deals with Google, Anthropic, and Broadcom to support various AI-related projects.

The firm acknowledges the risks associated with AI technology but carefully selects its positions, leveraging its scale and expertise to invest with conviction, focusing on attractive risk-adjusted returns with significant upside potential and downside protection. Blackstone is aware of the potential for excessive exuberance in this area and has chosen to invest cautiously, aiming for attractive risk-adjusted returns with significant upside potential and downside protection.