Blackstone President Jonathan Gray Talks AI Infra, EU & US Debt Woes

Jonathan Gray · Blackstone

India's long-term prospects stay exceptionally bright despite near-term headwinds, and the valuation reset makes entry attractive.

Gray says India's recent weakness has two causes: elevated energy prices hurt the economy and currency, and AI concerns hit IT services companies. He also says India had very high valuations 18 to 24 months ago, and that the resulting reset makes it more attractive to enter. He takes a long-term view of an economy growing over 7% a year, with a very young population, a rising middle class, and a pro-growth government. He concludes that even with near-term headwinds the country's prospects remain incredibly bright. Blackstone invests in India across real estate, private equity and infrastructure.

“we look at an economy that is growing seven plus percent a year, has a very young population, a rising middle class, a government that's pro growth... even if there are near term headwinds, they remained incredibly bright.”at 3:00

Jonathan Gray · Blackstone

AI compute demand far outruns supply, which is constrained by power, chips and entitlements; no imbalance yet.

Gray argues that compute demand is huge. Usage across Blackstone's companies is rising steeply, while supply is governed by physical constraints: chips, power, entitlements and capital, which are moving much more slowly. He says most of Blackstone's AI infrastructure exposure is long-term lease infrastructure to some of the biggest companies in the world. He compares this with the telecom boom, when companies built supply ahead of demand with heavy leverage, and says the current build-out looks and feels very different, with Blackstone disciplined in deployment. In Asia outside China, gigawatts are still very small, so the region is a long way from meeting demand. He sees no imbalance there. Public offerings being delayed is a healthy sign of market discipline. He sees chip financing and energy as critical to advancing the technology.

“there is enormous need and demand for compute... we're seeing usage go up into the right, and yet, the supply side, which is governed by the real world, by gravity and chips, and the need for power and entitlements and capital, that's moving much more slowly.”at 5:41

Jonathan Gray · Blackstone

Blackstone's portfolio companies are adopting AI broadly, with concrete gains such as 90% faster lease processing.

Gray says companies across Blackstone's portfolio want to use AI to make their businesses better and to serve customers. He gives concrete examples: a lease application process at a rental housing company is 90% faster, and a garage door opening business has much better visualization tools. He adds that individuals are now using personalized AI tools, and that usage keeps climbing. That usage growth is the basis for his view that demand for AI infrastructure is strong.

“we're seeing at our companies around the world a real desire to use AI to make their businesses better, to serve their customers, to make a lease application process at a rental housing company 90% faster.”at 5:41