Nine of Blackstone's 10 best-appreciating investments are linked to AI, the firm said, as distributable earnings rose to $1.52 a share
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Blackstone reported second-quarter results on Thursday that beat market expectations, as the world's largest alternative asset manager reaped gains from its artificial intelligence investments and pulled in record inflows that pushed total assets under management to nearly $1.35 trillion.
Distributable earnings came in at $1.52 a share, a 26% increase from $1.21 a share in the same period last year. That topped analyst expectations of $1.35 a share, according to Reuters. Total revenue jumped 36% to $5.04 billion, while fee-related earnings climbed 22% to $1.78 billion, or $1.43 a share, according to The Wall Street Journal.
Blackstone said that AI-related holdings account for nine of its ten highest-appreciating positions. These include a stake in Anthropic and its data center businesses. CEO Stephen Schwarzman described the strategy as a deliberate choice to "lean into the artificial intelligence megatrend," adding that establishing itself as "a trusted partner at scale to many of the key innovators" had put the firm in a strong position going forward.
The firm's infrastructure investing unit was a standout, producing gross returns of 7.2%. Private equity also benefited from AI-related positions, including stakes in SpaceX, Anthropic, and OpenAI, according to the Wall Street Journal. Asset sales during the quarter — including a partial interest in three data centers sold to Digital Realty and a controlling stake in power infrastructure company Sabre Industries sold to TPG — lifted Blackstone's total monetization activity to $31.8 billion, according to Reuters. The quarter also saw Blackstone bring three holdings to public markets: ad-tech firm Liftoff Mobile, data center vehicle Blackstone Digital Infrastructure Trust, and Indian office REIT Bagmane.
Not all segments performed equally. Private credit inflows slowed for a second straight quarter to $31 billion, according to the Wall Street Journal. BCRED, Blackstone's flagship private credit fund for individual investors, attracted $1 billion in new capital during the quarter, compared with $1.9 billion in the three months prior. Private credit net returns recovered to 0.4% after coming in flat the previous quarter, though they have yet to approach the 2.2% the segment posted a year earlier.
Blackstone has been deepening its AI commitments on multiple fronts. The firm's credit and insurance unit is part of a $35 billion financing platform established with Broadcom $AVGO and Apollo Global Management to fund AI infrastructure for frontier labs including Anthropic. Separately, Blackstone and Google $GOOGL said they plan to create an AI cloud company using Google's chips, involving $5 billion in equity capital from Blackstone.
Withdrawals from BCRED have been a pressure point. Redemption requests reached 10% of shares outstanding in the second quarter, prompting Blackstone to cap withdrawals at 5% of shares outstanding — the standard industry ceiling. The fund holds $79 billion in assets.
Blackstone shares were down 1.1% before the market opened Thursday. The stock has declined 20% this year through Wednesday's close.
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