Blackstone profits jump, boosted by exits and bets on AI

(Bloomberg) — Blackstone Inc. reported a 26% jump in distributable earnings for the second quarter, buoyed by profits from exits and its artificial intelligence-related investments.

The distributable earnings — or profits available to shareholders — rose to $1.97 billion in the three months through June, the New-York based firm said in a statement Thursday, beating analysts’ predictions of $1.66 billion. That amounted to $1.52 a share, surpassing the $1.33 average estimate of analysts surveyed by Bloomberg.

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

AI bets continue to drive Blackstone’s performance, with nine out of top 10 appreciating investments tied to data centers, energy, power and large language models, Blackstone President Jon Gray said in an interview.

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

“Our outstanding results are proof of our early, strategic decision to lean into AI, its infrastructure and compute shortage,” Gray said. “And clearly this decision to lean into AI is making a big difference for our investors.”

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

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

There’s also interest in certain non-AI firms, Gray added. “If you’re a medical-supply business, if you’re a fast-food chain, people want to own those kinds of businesses,” he said. “So there is interest in the real world away from the AI trade.”

Still, the vast majority of the firm’s capital deployment in the second quarter was to investments across the AI ecosystem, including the $5 billion of equity Blackstone gave to a new cloud company it is setting up with Alphabet Inc.’s Google. Blackstone also founded Ode with Anthropic, along with Hellman & Friedman and other consortium members.

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

Gray said he expected the firm to continue to deploy significant capital into AI infrastructure and its financing. In the second quarter, the firm had $228.1 billion of dry powder, or the capital it has available for new investments.

Distributable earnings at Blackstone’s credit and insurance arm fell for the second quarter in a row, dropping by 6% to $373 million. Still, those operations drew $31 billion of capital inflows during the quarter, about 45% of the companywide total of $68.3 billion.

Just weeks before the US and Israel attacked Iran and sent oil prices soaring, Gray said in January that dealmaking and listing activity was accelerating.

“It looks like our call of this year being the year of the IPO, for now, seems pretty good,” he said in the interview.