Blackstone profits jump, boosted by exits and bets on AI

(Bloomberg) — Blackstone Inc. reported a 26% increase in distributable earnings in the second quarter, driven by profits from exits and AI-related investments.

The New York-based company said on Thursday that distributable earnings (or profit available to shareholders) rose to $1.97 billion in the three months to June, beating analysts’ forecasts of $1.66 billion. That came to $1.52 per share, beating the average estimate of $1.33 from analysts surveyed by Bloomberg.

Blackstone shares rose 2% to $125.20 at 9:50 a.m. in New York.

Artificial intelligence bets continue to drive Blackstone’s performance, with nine of the top 10 investments gaining value, with investments tied to data centers, energy, power and big language models, Blackstone President Jon Gray said in an interview.

For example, last month’s sale of data center assets to Digital Realty Trust Inc. for $3.5 billion pushed the real estate division’s performance revenues to the highest level in four years, Gray said.

“Our outstanding results are testament to our early and strategic decision to address AI, its infrastructure, and the computing gap,” Gray said. “And frankly the decision to move towards AI makes a big difference for our investors.”

In an interview with Bloomberg TV on Thursday, Gray said he “feels good” about the firm’s focus on artificial intelligence and that people underestimate the positive effects the technology is already having on companies.

“Businesses are creating new lines, new revenue streams using this artificial intelligence,” he said.

Gray added that there is also interest in some non-AI companies. “If you’re a medical supply business, if you’re a fast-food chain, people want to own those types of businesses,” he said. “So there is interest in the real world, away from the AI ​​business.”

Still, the vast majority of the firm’s capital deployment in the second quarter was directed toward investments in the artificial intelligence ecosystem, including $5 billion in equity to a new cloud company that Blackstone is building with Alphabet Inc.’s Google. Blackstone also founded Ode with Anthropic with Hellman & Friedman and other consortium members.

Blackstone also partnered with Broadcom Inc. to facilitate the expansion of Anthropic and OpenAI’s computing capacity. and Apollo Global Management Inc. It was part of the $35 billion financing platform with.

Gray said he expects the firm to continue dedicating significant capital to AI infrastructure and financing. In the second quarter, the company had $228.1 billion in dry powder, that is, capital it could use for new investments.

Distributable earnings at Blackstone’s credit and insurance arm fell for the second consecutive quarter, falling 6% to $373 million. Still, these operations generated $31 billion in capital inflows during the quarter; that was about 45% of the $68.3 billion companywide total.

Just weeks before the United States and Israel attacked Iran and oil prices soared, Gray said deal-making and listing activity had accelerated in January.

“Our call for this year to be the year of the IPO looks pretty good for now,” he said in the interview.

The firm completed three IPOs in the second quarter, including advertising technology company Liftoff Mobile, Inc., which raised $437 million in its IPO in June. Blackstone has eight more companies to go public this year, according to Gray. Among them: Jersey Mike’s Subs Inc., which filed for an initial public offering this month and is expected to raise more than $1 billion. is also included.

Blackstone’s infrastructure business continued to outperform other strategies, generating a gross return of 7.2% in the second quarter.

Blackstone raised $8.6 billion through its private wealth channel in the second quarter; That was less than the $10 billion it earned in the first quarter of the year. Gray said fundraising for BCRED, a private loan fund for the wealthy, has remained muted but there has been a slowdown in repayments.

—With help from Erin Fuchs.

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