Blackstone NYSE: BX CFO Michael Chae said the firm sees a constructive backdrop for corporate profits, investment deployment and fundraising, citing accelerating earnings growth, expanding margins and demand for capital across infrastructure, private credit and private wealth markets.
Speaking at a financial services conference, Chae described the current environment as a “corporate earnings boom,” pointing to what he said was the fastest S&P earnings growth in five years during the second quarter. He added that 2026 is currently projected to be the strongest year for S&P earnings growth in 25 years, excluding rebound periods following the global financial crisis and COVID-19.
Chae said investment in digital and energy infrastructure is driving the expansion, while remaining below the scale of prior investment cycles as a percentage of gross domestic product. He also said companies are only beginning to capture AI-related productivity gains at scale. Blackstone’s portfolio companies have expanded margins by about 700 basis points on average over the past 40 years, reaching the high-30% range, he said.
Deployment and Realizations
Chae said scale and a broad investment platform are increasingly important because major global markets need more capital to support growth. He identified AI-related infrastructure, power and electrification, life sciences, private-market liquidity solutions, secondaries, private investment-grade credit and investments in India and Japan as key opportunity areas.
According to Chae, 70% of Blackstone’s largest investments over the past 12 months were in those areas. He said the firm’s ability to invest across strategies and regions differentiates it from more narrowly focused asset managers.
On exits, Chae acknowledged that traditional private-equity realizations have remained constrained and that sponsor-backed transaction volumes have recovered more gradually than the broader mergers-and-acquisitions market. However, he said Blackstone has benefited from its exposure to larger, higher-quality companies that appeal to public-market investors.
- Blackstone completed nine initial public offerings over the past year, including five since May.
- About one-third of its corporate private-equity net accrued performance receivable, or NAPR, is publicly traded, Chae said.
- The firm has six IPOs currently on file globally.
- Its energy private-equity business doubled its NAPR over the past year to more than $1 billion, driven by investments in power and electrical equipment.
Fundraising and 2027 Outlook
Blackstone raised more than $260 billion of inflows over the past 12 months, representing 24% growth from the prior trailing 12-month period and its strongest fundraising stretch in nearly four years, Chae said. He attributed the results to demand across institutional, insurance and individual-investor channels.
Institutional inflows rose nearly 50% year over year in the second quarter, he said, while multiple Blackstone drawdown funds reached hard caps. Infrastructure assets under management rose 40% year over year to $90 billion as of the second quarter.
In insurance, Blackstone manages $290 billion of assets as the largest non-captive alternative insurance platform, Chae said. That figure has increased nearly fourfold over five years. The firm’s dedicated insurance-solutions business serves 40 clients, a number that has doubled during the past two years.
Assets under management from individual investors reached $324 billion, up nearly 2.5 times over five years. Chae said the firm has flagship wealth products spanning real estate, private equity, infrastructure, credit and hedge funds.
Looking toward 2027, Chae reiterated Blackstone’s expectation for a return to double-digit base management-fee growth. He cited the full-year contribution from new drawdown funds, expansion of perpetual-capital vehicles, momentum in the BXMA hedge-fund solutions business, transaction fees and a constructive outlook for realizations.
AI Investment Strategy and Operations
Chae said Blackstone’s AI strategy spans data centers, power, frontier AI companies, credit and partnerships with technology firms. He said the firm invests in data centers supported by committed leases typically lasting 15 to 20 years with highly creditworthy tenants, built-in escalators and attractive yields on cost.
He said Blackstone’s power investments were initially based on the long-term need for electrification and grid modernization, a thesis that has been strengthened by AI-related electricity demand. The firm has also made what Chae called “sensibly sized bets” in frontier AI companies with potential for substantial upside.
Blackstone is partnering with Google to create Crux AI, a neocloud for TPUs; launched Ode with Anthropic in July to support enterprise AI adoption; and has created financing platforms with Broadcom and NVIDIA, Chae said.
Internally, Blackstone is using AI to improve investment decisions, portfolio-company performance and its own operations. The firm has more than 50 data scientists, over 1,000 technology professionals and more than 100 operating executives involved in implementation, he said. Areas of focus include software development, legal and compliance, cybersecurity and valuations.
Credit, BXMA and Private Wealth
Chae said Blackstone’s credit platform has $550 billion in assets under management, including direct lending, collateralized loan obligations, real estate private credit, and infrastructure and asset-based credit. The latter business had more than $125 billion in assets and grew 28% year over year in the second quarter.
He said direct-lending spreads have widened by 25 to 50 basis points since the start of the year while loan-to-value ratios have declined. Across BCRED borrowers, EBITDA grew 10% over the previous 12 months, while average interest coverage rose to roughly 2.3 times. Software borrowers continued to generate double-digit EBITDA growth, he said.
BCRED experienced a sharp quarter-over-quarter decline in new repurchase requests, Chae said. Investors submitting redemption requests in the second and third quarters will have received approximately 75% of their capital back. The fund recorded $3.5 billion of repayments and inflows during the quarter, covering repurchased shares by about 160%, according to Chae.
Chae also highlighted BXMA, which had $109 billion in assets under management as of the second quarter. Its largest strategy generated a 12% annualized return over three years and recorded 25 consecutive quarters of positive returns through the second quarter, he said. BXMA’s new private-wealth perpetual product, BXHF, held an initial close of more than $200 million in August.
Chae said the firm believes the market continues to underappreciate its near-term earnings power and long-term position as private-market adoption expands. He added that concerns around private credit, private-wealth flows and capital markets have begun to ease during the year.
About Blackstone (NYSE:BX)
Blackstone Inc is a global alternative asset management firm that provides investment management and advisory services to institutions, corporations, and individual investors. The company invests across multiple asset classes, including private equity, real estate, credit, infrastructure, insurance solutions, and hedge fund solutions.
Its investment activities include acquiring and managing businesses, commercial and residential properties, infrastructure assets, and credit investments.
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