Bloomberg Talks: Jonathan Gray (Podcast)

Blackstone COO Jon Gray says AI’s impact is being underestimated, citing AI-driven new revenue streams. The interview coincides with Blackstone reporting a 26% jump in Q2 distributable earnings, supported by exit profits and gains from its artificial-intelligence-related investments.

Analysis

Blackstone’s AI angle is less about “owning the model” and more about tollbooths on the picks-and-shovels buildout: data centers, power, fiber, and specialized credit. If AI capex keeps compounding, BX can monetize twice — through higher asset values on existing infrastructure and through new fee-bearing vehicles raised into the theme — which should support fee-related earnings even if transaction volumes stay uneven. The market may still be underpricing how much of AI’s value accrues to capital allocators rather than software vendors.

The near-term risk is that this story is narrative-first and cash-flow-later. In the next 1-3 months, the stock will likely trade more on realization activity and fundraising than on AI commentary, so any disappointment in exits or deployment pace would quickly drown out the strategic upside. Over 6-18 months, the key falsifier is whether AI infrastructure spend concentrates inside a few hyperscalers, leaving less incremental fee opportunity for third-party managers.

Competitive dynamics matter: BX should benefit if LPs want diversified exposure to AI without single-name semiconductor risk, but KKR, APO, and infrastructure specialists can also capture the same wallet. The market is probably overfocused on software monetization and underfocused on asset owners with scarce land, power, and financing relationships. That makes this more of a steady compounding story than a quick re-rating catalyst unless management can show direct fee/AUM conversion from AI assets.

Key Decisions for Investors

• Long BX on weakness into the next 1-3 months; thesis works if distributable earnings stay resilient and management can show AI-related AUM or investment gains converting into recurring fees. Falsify if exits slow materially or fundraising stalls.
• Pair trade: long BX / short a more traditional alternative-manager proxy such as CG over 1-3 months if you want to isolate BX’s infrastructure and real-asset AI optionality versus firms with less embedded power/data-center exposure.
• If using options, prefer BX call spreads 3-6 months out rather than outright calls; the upside is a gradual multiple re-rate, while near-term realized earnings noise can cap the stock.
• Watch for confirmation in upcoming earnings and investor-day commentary on data-center, power, and digital infrastructure deployment; if those sleeves fail to grow, treat the AI premium as overdone.
• For a lower-conviction expression, buy BX vs. XLI as a macro hedge: the trade benefits if AI capex keeps supporting capital formation while industrials remain exposed to slower activity elsewhere.