Blackstone, the world’s largest investor in data centres supporting the artificial intelligence (AI) boom, is evaluating how Chinese start-up DeepSeek’s low-cost AI model could influence demand in the sector. The US investment giant has committed $80 billion to building infrastructure that serves Big Tech’s ever-growing AI requirements.
The surging demand for AI-powered computing has driven up data centre rents, significantly boosting Blackstone’s earnings. The alternative asset manager has been a key player in constructing data centres leased to major tech companies, including Amazon, Microsoft, and Alphabet.
In its fourth-quarter results, Blackstone reported $2.2 billion in distributable earnings, a key metric for cash flow closely monitored by analysts, surpassing market expectations. These results were partly driven by $1.4 billion in performance revenues, largely derived from perpetual infrastructure and credit funds linked to data centre investments.
Despite concerns over DeepSeek’s impact on compute costs, Blackstone President Jonathan Gray stated that major clients have not signaled changes in their AI infrastructure strategies. The firm remains committed to its investment plans, even as it closely monitors industry developments.
“This does highlight the fact that compute costs are going to come down, and adoption is probably going to accelerate. It’s possible the use cases for data centres may change,” Gray said. However, he emphasized that Blackstone mitigates risks by leasing data centres primarily to financially strong tech giants.
While acknowledging that AI advancements could alter the dynamics of data centre utilization, Gray reaffirmed Blackstone’s confidence in the sector’s long-term prospects. “We still see a lot of need for digital infrastructure and power,” he noted. “We still think this is a very favourable place to deploy capital.”
Beyond AI infrastructure, Blackstone’s financial performance has also been buoyed by improving market conditions and increased transaction activity. The firm raised $171 billion in new investor capital and invested $134 billion in 2024—both near-record figures.
Looking ahead, Blackstone is preparing to raise capital for a new flagship buyout fund, having nearly deployed all of a $20 billion fund closed last year. Gray highlighted growing investor confidence, noting that institutional players such as pension funds and endowments are beginning to reinvest aggressively after a period of caution driven by rising interest rates.
“The tone of the conversations and the commitments from investors feels like it’s normalizing,” Gray said. “We went through a period where rates went up, markets became dislocated, and there was more caution from the institutional community.”
With financial markets stabilizing and regulatory conditions improving, Blackstone anticipates a resurgence in mergers and acquisitions (M&A). Gray expressed optimism about a strengthening deal pipeline, stating, “We have all the ingredients for a good M&A soup with a strong economy, healthy debt and equity markets, and a more favourable regulatory environment.”
