Massive AI spending 'exactly the opposite' of a bubble: Blackstone

AFP | Paris

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Huge investments in AI data centres and other infrastructure are not fueling a stock market bubble, a top Wall Street firm insisted after a commitment to spend billions alongside chip giant Nvidia.

Investors are increasingly questioning if the massive outlays in artificial intelligence will justify sky-high valuations for technology firms, or prove a painful bubble reminiscent of the late-1990s dot-com boom and bust.

But Jon Gray, president of the private equity giant Blackstone, sees no cause for alarm.

"Despite genuine demand for computing power, all the applications of this intelligence and the productivity gains it enables are constrained by the available supply," Gray told French media Les Echos Capital Finance in an interview published Friday.

"This is exactly the opposite of what we see in a classic bubble," he said, where capacity investments outstrip actual demand.

Blackstone is among six Wall Street firms including Apollo and Goldman Sachs that signed a deal with Nvidia last month to deploy over $500 billion to finance the infrastructure for running ever more powerful AI models. "The capital requirements are enormous: each one-gigawatt 'AI factory,' as Jensen Huang describes it, represents $35 billion of chips alone," Gray said, referring to Nvidia's chief.

He added that by investing in infrastructure, Blackstone did not have to worry too much about excessive evaluations for tech firms, or which ones would be winners or losers in the AI race.