Blackstone reported $2 billion in second-quarter distributable earnings, and Stephen Schwarzman said investing in AI infrastructure helped drive the result. The firm also warned about excessive exuberance in AI, a split that leaves investors weighing earnings momentum against the pace of the boom.
Blackstone’s $2 billion quarter
$2 billion in distributable earnings translated to $1.52 per share, up 26% from a year earlier and ahead of the $1.7 billion analyst expectation. That jump came as Blackstone said its earlier investments in data centers, energy, power, and AI companies were the biggest driver of the quarter.
26% annual growth is a sharp change for a firm that is still dealing with pressure in other parts of the business. Blackstone’s stock rose 1% on Thursday after briefly declining, even though it remains down more than 19% since the beginning of January.
Schwarzman on AI investing
79-year-old Stephen Schwarzman said Blackstone had been selective in the AI infrastructure boom and that the firm was using its scale and knowledge advantage to build conviction. He also said, “In terms of risks, we're mindful of the potential for excessive exuberance in this area, and we've carefully chosen our spots, leveraging our scale and knowledge advantage to build conviction.”
Blackstone’s AI exposure is not one bet. In May, it launched an AI cloud provider with Google parent Alphabet, and in the second quarter it launched a $35 billion investment platform with Broadcom and Apollo Global Management to lower compute and power costs for training AI models. The structure points to a capital-heavy strategy built around the infrastructure behind AI rather than the software layer alone.
BCRED pressure and AI gains
$4.4 billion in withdrawal requests hit Blackstone’s flagship private credit fund, BCRED, last month, equal to 10% of investor shares requested. Blackstone capped withdrawals at 5% after allowing investors to redeem their full requests in the first quarter, a sign that demand for cash is rising even as the firm books gains elsewhere.
95% lower net realizations in Blackstone’s credit and insurance division, to $3 million, also cut into that side of the business, and the division’s contribution to earnings fell 6%. Against that backdrop, Schwarzman said, “Major change of this type also creates anxiety due to the uncertainties of how the technology will evolve.”
What Blackstone still owes investors
Blackstone’s infrastructure business within its private equity division grew 7.2% in the quarter and 28.6% over the previous 12 months through June, while private markets have already seen nearly $200 billion of data center deals since early last year. Schwarzman also said, “We will need to monitor these developments as a society and course correct when necessary.”
The open issue is how much of the $2 billion profit surge came from each AI-related investment. Blackstone said the AI gains were material, but it did not break out the return from each asset, leaving investors to judge whether the selective strategy can keep outrunning the drag from private credit.
