Blackstone is positioning itself as a major financier in the AI sector, deploying capital through loans and investments in AI infrastructure and applications. Jas Khaira, who leads Blackstoneās AI-focused group Blackstone N1 (BXN1) in San Francisco, highlighted the firmās unique role in funding the AI buildout during a discussion at TechCrunch Disrupt.
Khaira explained that unlike previous tech waves, AI demands exceptionally large investments in compute resources. Blackstone, with $1.3 trillion in assets under management, leverages its scale to provide flexible capital solutions, including debt and equity, to AI-focused companies. The firm claims to be the largest owner of compute capacity outside of hyperscale cloud providers.
Blackstone has backed several neocloud providersācloud platforms specializing in AI GPU infrastructureāsuch as Crux AI and CoreWeave. The firm pioneered a financing model that uses customer contracts and GPU assets as collateral to extend substantial loans. For example, CoreWeave secured a $2.3 billion loan from Blackstone in 2023 despite limited profitability, supported by contracts with major clients like Microsoft.
This model has been replicated in other deals, including a $10 billion credit facility for Australian GPU provider Firmus. However, recent market concerns have emerged due to the ballooning debt levels of these neoclouds, with CoreWeaveās debt reportedly reaching about $50 billion. Critics, including Altimeter Capitalās Brad Gerstner, have questioned the sufficiency of GPU collateral amid rising borrowing costs.
Khaira attributed market jitters to rising interest rates and inflation, which have increased credit spreads and borrowing costs even for tech giants like Meta and Microsoft. These factors contributed to CoreWeaveās stock decline and Firmusās withdrawal of its planned IPO.
Despite these challenges, Khaira emphasized that AI companiesā demand for compute remains strong, driving ongoing data center expansion. He dismissed fears of a broader credit crisis linked to AI infrastructure debt, noting that most data center financing is ultimately secured by highly creditworthy hyperscalers.
Beyond infrastructure financing, Blackstone is advancing AI adoption through a $1.5 billion joint venture called Ode with Anthropic and Hellman & Friedman. Ode provides engineering support to integrate AI into operations, starting with Blackstoneās portfolio companies.
Khaira acknowledged that while AI adoption is delivering returns, progress is uneven and may appear irregular, reflecting the evolving nature of technology integration across industries.