AI spending is not a bubble, Blackstone says

Heavy spending on AI data centres and related infrastructure is not fuelling a stock market bubble, Blackstone president Jon Gray said in an interview published Friday.

Investors have been questioning whether large artificial intelligence investments will justify high technology company valuations or resemble the late-1990s dot-com boom and bust.

Gray told French media Les Echos Capital Finance that demand for computing power, AI applications and productivity gains is being limited by available supply.

"This is exactly the opposite of what we see in a classic bubble," he said, referring to periods when capacity investments exceed actual demand.

Blackstone is among six Wall Street firms, including Apollo and Goldman Sachs, that signed a deal with Nvidia last month to deploy more than $500 billion to finance infrastructure for increasingly powerful AI models.

Gray said the capital requirements are large, adding that each one-gigawatt "AI factory," a term used by Nvidia chief Jensen Huang, represents $35 billion of chips alone.

He said Blackstone's infrastructure focus means it does not have to rely on judging which technology firms will win the AI race.

"Our conviction is not that all valuations will be justified or that every company will succeed," Gray said. "It is that demand for AI and the impact of AI will exceed expectations."