Blackstone on the AI Ecosystem, IPOs, and Real Estate | Jon Gray's Market Views July 2026
In a Nutshell
Blackstone has built an extensive AI ecosystem investment platform spanning data centers (QTS acquisition), energy infrastructure, foundational models (Anthropic, OpenAI), and real-world assets like Bay Area hotels, all positioned for long-term contracted revenue from hyperscale demand. The firm has completed multiple IPOs including BXDC and expects strong public market reception to continue, while real estate shows recovery signals with supply down 60% and improving fundamentals across logistics, hotels, and offices. The economic outlook remains positive despite energy price pressures, driven by 11% private equity revenue growth from AI-related capital spending.
These notes were generated by AI and may contain inaccuracies.
Blackstone completed a big partnership with Google in TPUs to create a company. They created a company with Anthropic called Ode to deploy their technology. They did a big financing partnership with Broadcom. The firm has taken three companies public, including BXDC, their data center REIT. They are expecting to complete an IPO with Jersey Mike's. They completed a renewables company in Europe called Eurowind and an aerospace company called Senior. They sold a bunch of data centers to Digital Realty. They completed a big partnership with Williams Company around energy for data centers.
The economic outlook is described as pretty sunny with a few clouds, primarily tied to the war driving energy prices higher and interest rates higher. Despite these challenges, private equity businesses have shown remarkable performance, with 11% revenue growth in the quarter, even stronger in the United States. This growth is being powered by huge investment spend tied to AI and AI infrastructure. Weakness exists in Europe and the housing market with elevated rates, but overall the picture is considered pretty good.
AI is viewed as almost a new operating system for the global economy - changing how people live and how businesses function. While there is some impatience about the pace of change and concerns about wasted tokens, the view is that this impatience is misplaced because it takes time for applications to develop. Changing established systems like internal finance departments that have operated a certain way for 40 years requires time. The most exciting aspect is the revenue opportunities emerging from AI applications.
Chamberlain, a company that makes garage door openers, has created a digital doorman product that has generated $40 million of revenue unexpectedly. They anticipate this will grow to 500 plus million of revenue over the next 4 or 5 years. This exemplifies how AI can give customers better products at better prices and generate new revenue streams.
Blackstone's investment in the AI ecosystem started with the acquisition of QTS for $10 billion, a major data center company in the United States. After the launch of ChatGPT, demand from hyperscale companies for more compute began appearing in QTS. This led to additional investments in energy, pipelines, and renewables due to power requirements. They also invested in electrical equipment for grid expansion. Investments were made in neoclouds providing data centers and GPUs through debt and equity, with increased lending to the ecosystem on energy, GPU, and data center sides.
Investments were made in foundational model companies including Anthropic and OpenAI, as well as SpaceX which houses xAI through the wealth platform. Three hotels were acquired in the San Francisco Bay area to benefit from AI-driven demand resurgence. The approach emphasizes responsible investing through picks and shovels plays that are long-term contracted, based on the creditworthiness of very large, lowly leveraged companies.
2026 was designated as the year of the IPO, with IPO volume up sixfold. SpaceX helped drive this trend, and Blackstone has completed a number of IPOs. High quality businesses are receiving good reception in public markets, which is expected to attract more companies. The trend is expected to continue for the balance of the year.
Hedge funds are viewed as never having gone away, with increased openness among investors. The focus has shifted from the original concept of beating the stock market with full downside protection through long-short equity strategies. The current objective is to deliver attractive absolute returns with a premium to what liquid 60/40 portfolios produce, while providing downside protection and better liquidity than private assets.
The real estate cycle has been longer than anticipated due to the dramatic rate rise that hit the sector. Office buildings were particularly affected by COVID and remote work. The normalization of rates has taken longer, especially with recent events including Liberation Day and the war. However, green shoots are beginning to appear. New supply is down 60% in major real estate asset classes in the US from the peak, while healthy economic demand is driving activity.
Link Logistics has begun to grow rents and occupancies, indicating strong fundamentals. The hotel business has moved from negative same store sales last year to positive mid-single digits. Office markets are improving, with New York vacancy rates declining from 21.5 to 14.5. Based on supply-demand dynamics, even with elevated rates, a tailwind in values is expected.
A new podcast called Inside Blackstone is being launched, hosted by Christine Anderson. The podcast will feature insights from portfolio companies, learnings from Blackstone personnel, and guests visiting the building. The format aims to be lively and interactive.
The firm is positioned in the midst of a powerful technology transformation, with investments across every element including infrastructure, compute, data centers, chips, and energy. The positioning at the intersection of AI and the physical world is expected to make an enormous difference for investors. The strategic decision to lean into this transformation is expected to lead to higher returns and better outcomes for investors over time.
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