Blackstone's Jon Gray Addresses 700+ Clients | May 2026

So, first off, thanks everybody for coming out. This is really special. I love this event and I love the fact that we keep making it larger, bringing more people together because it does speak to that flywheel Vic was talking about. Um, you have to acknowledge that we are facing near-term challenges. This war certainly has caused oil prices, energy prices generally to go up and it's led the 10- and 30-year Treasury and other rates around the world to go up. But what we like to do is take a little bit of a longer term view. So if you go back since 2020, almost every year started with a fairly significant crisis. We had COVID, which we all remember well. We had the Russia invasion of Ukraine. We had Silicon Valley Bank. Last year, we had Liberation Day and now the Iran war. And in each of those years, we got through those crises. Ultimately they were resolved in some way or people got accepting of those facts and the markets went higher and I would guess there'll be a similar dynamic this year. I don't know how quickly this will be resolved but I would say we have confidence that we'll get to some better place and the key thing is then to look at what are the rest of the facts on the ground. So the US economy, the global economy is healthy. Our portfolio of companies in private equity had double-digit revenue growth in the first quarter, weaker in Europe, but generally a pretty good picture. When we look at inflation, what do we see there? Yes, oil prices are up, lingering impact of tariffs, but also we see shelter costs, rental housing costs running well below the government data, probably a third below the government's lag data that says 3% growth. And we see the labor market going from running at 5% wage growth two years ago to 3%. And we think there's going to be a very significant productivity boom coming from this technology. So, pretty healthy economy. Pretty good facts that I think Kevin Worsh is going to inherit as the new head of the central bank here in the US. Yet, the thing that gives me the greatest excitement, which you're going to hear a lot about today, of course, is what's happening around this technological revolution. What's happening with AI? $800 billion is going to be spent by five companies. Daniel Gross is going to be up here responsible for the capex spend and infrastructure and Meta. That's an enormous amount of money. Little old Blackstone with our leasing in data centers. We think this year we'll sign six gigawatts. Six gigawatts is a hundred billion of data centers. Another 200 billion of chips that the hyperscalers will put in. $300 billion is the size of the Finland economy. Now, that won't all happen this year, but it just gives you a sense of what's going on in the ground, which is very bullish, and it's mostly in the US, but we think will spread more to the rest of the world. And then we have this productivity boom that should come from all this. We saw this back in the '90s when we all went on the internet. Now, we're going to experience it at massive scale. The efficiencies that are going to come from this technology are very significant. They've started obviously with coding and engineering. It's going to start to diffuse to the broader economy. We've set up a business to try to help accelerate that. That's going to be really good for growth. It's going to be really good for corporate earnings. So, that is a fairly bullish picture. Now, what is the proverbial fly in the ointment here? It's that what's going to come with this is pretty significant disruption. And the market has begun to recognize some of these risks, sometimes a little indiscriminately. But what is going to happen to lots of professional services businesses, information services businesses, software businesses? We remember what happened to the yellow pages 20 plus years ago. That's now going to happen in a whole range of industries. And so incorporating that, and by the way, it goes beyond just that. Think about when autonomous vehicles come, what that's going to mean for automotive repair and insurance businesses. So I think as an investor today there are real challenges to try to think about what's the world going to look like in the future but at the same time enormous opportunity and acceleration of growth because of what's happening with AI.

Well, clearly, and you'll hear a lot about this today, but the infrastructure that's going to make this a reality, we think is the best risk-adjusted way for us to play it, okay? Because we all know there's going to be enormous need for electricity. The data centers, the robots, the autonomous vehicles, the reindustrialization, it's all going to plug into the wall. So, pipelines, utilities, renewables, electrical equipment, utility services, what we do in our energy transition area, all of that. If you think about power and energy, that's a pretty easy thing to believe in, which we do in a number of ways. Then of course the data centers, the neoclouds really taking, you know, those electrons that come in and turning them into tokens. There's just huge need. Now, everybody talks about is there overbuilding? That's a big risk because there's a lot of capital. I would argue today the opposite is the risk that the political pushback which is growing, that the shortage of power, the shortage of turbines, the shortage of memory chips and the almost exponential growth in demand means these data centers once you get them built are going to be incredibly valuable. And so we've leaned into that business on a global basis. The Neo clouds as well which we can talk about with our TPU announcement. I would say away from the AI world and the infrastructure there, I think defense sadly is going to be a huge growth industry. If you wanted to make a bet in Europe, defense is probably the one area that's got the greatest tailwinds today as these economies go from spending or governments from one and a half percent up to as much as 5% of GDP. I think real estate is going to really get a tailwind here as people look for terra firma. They're nervous about the disruption. They're nervous about dislocation. There's been this sharp decline in new building. Debt costs have come down and then I think capital will begin to rediscover this area. It is certainly been a laggard for the last four years. One of the least bubbly parts of the economy. I would say logistics is my favorite part of the real estate ecosystem. I think secondaries will be quite compelling. I think that it's going to mean there's going to be a large universe of secondary sellers. That's a dynamic that's very favorable for Vernon Perry and that business of ours. I'd say on the credit side, these big corporate solutions often tied to the needs for AI infrastructure where we can provide private capital at scale both investment grade and non-investment grade. That to me is interesting. And then I would just say on a global basis, wherever you're seeing people embrace capitalism, encourage risk-taking, being thoughtful around taxation is where we're seeing more growth. So today, that's certainly in the US, a little more of course in the middle of the country. It's also the case in the Middle East, which today is facing headwinds, but I think will rebound both the GCC countries and Israel. I think India will continue to be a place as it moves on this capitalist path that we will deploy capital at scale. You'll hear from Amit. Um, and then Japan has really been transformed over the last few years and become a very interesting place to deploy capital. And it doesn't mean there aren't opportunities in other markets around the world, in Europe, Canada, Australia, other emerging markets, but in general, these are the places where we're seeing higher rates of growth, which tends to translate into higher rates of return.

So, I'll hit each of these quick. Anthropic, you know, we spent a lot of time with the folks in Anthropic. We've invested in the company. The CFO and much of his team are ex-Blackstone private equity people who trained under Joe Barata and Martin Brand. Um, we were spending time myself and Jazz Carara talking to Anthropic about our companies. Really they use Claude Code with the engineers but we're having a hard time changing workflows, financial report and compliance. What can we do? And we identified, we all saw there's a gap between these super powerful models and the companies themselves. Okay. So the idea was to create a joint venture. We brought in some other investment firms with portfolio companies as well to try to bridge that gap and that consulting company, I think, or that deployment company should grow to be quite large. What excites us the most and it goes back to Vic's flywheel is we're going to be able to bring this technology to people, the best models most up-to-date, to our 275 portfolio companies and to us. That's very exciting. Okay, then let's do BXDC which just IPOed under Nick Pill. BXDC is the basic idea. What's the market hole there? There are hundreds of billions of data centers being built. There are going to be trillions ultimately, I think. And yet there's no natural home for them today. These are great long-term assets. You know, they're leased to the biggest companies in the world. You can buy them and there wasn't a home. And so we created a company to be part of that end of the ecosystem. And what you'll get the effect of here or the sense of is we're trying to do everything from the energy over here all the way to Anthropic to deployment across that entire spectrum. Deliver returns but do it in a thoughtful way because we know there'll be ebbs and flows and not everything's going to win.

Yes. So Google TPU is in some ways similar. We're trying to fill a gap. If you think about the GPU, which is the heart of the entire AI world, it reminds me a little bit of what Amazon had when it started the cloud business. Basically, almost 100% market share. And over time, Microsoft, Azure, Google Cloud came along and they didn't grow as large, but they grew quite a bit. And we think when it comes to these chips, there'll be a similar dynamic. Nobody's saying Nvidia is going away. We're investing in a ton of NVIDIA data centers, Neoclouds, but there's room for more players. And Google has a TPU that is highly effective, that has trained Anthropic, trained Gemini, and we think there's going to be more and more demand for it. And yet, they need some people who can help with the financial burden, a company that can turn this into more of a compute as a service as opposed to a huge capital investment and also has the expertise to manipulate this and install it and make it work in the optimal way. So again, we're creating a company from scratch because there's an enormous opportunity and we want to try to fill it and bring it to our investors in the process. And then BXN1 is also going to help sort of our insights be spread across the portfolio in a thoughtful way led by a really dynamic leader.

I know. Um, the idea was basically similar to what we did in credit a few years ago where we took insurance, corporate credit, asset back credit. We were doing them all separately and we said this doesn't make any sense. Let's put it together and create BXCI under GL. It's been a massive success. Now the idea is we're doing these high-growth companies, N of one companies, very special businesses. We've been investing them. Sometimes we're doing structured things, sometimes growth equity, and we were doing it in different business units. So let's put it together under one roof under one of our most experienced investors in Jazz Carara and say we're going to really go for it. We're going to be part of the firmament in San Francisco and Northern California. And I think we have a really special right to win because we own all these businesses who in many cases can deploy these new technologies. And we have a unique ability to show up with scale capital both for debt, for structured equity, for common equity. We have something really special, but we want to house that together in one place to get to optimal outcomes.

So I would say there's definitely going to be significant disruption in software. And again I like to look back at history. Have we experienced things like this? So I go back and I say when retail came, when online retail came along with Amazon, you could have said everything's going to get wiped out, all traditional retail. And what ended up happening was there was Sears Roebuck and Kmart and Toys R Us and they went the way of the dodo bird, but at the same time Costco stock is up sevenfold, um, or I think 20-fold. Walmart's up sevenfold. TJ Maxx is up something like 40-fold. And so those companies found a value proposition that worked in an online or omnichannel world. They found ways to use the technology or to be competitive and they succeeded. And I think in software there's going to be very similar dynamics. There will be companies that have deeply embedded systems of record that are part of the infrastructure that also have management teams who wake up and transform their businesses, just as many software companies had to go from on-prem to cloud. Now they're going to have to go from cloud to agentic and some of them will be able to do that. And some of those companies are going to be worth a fortune more than they are. And some are not going to appreciate and some are going to go away themselves. I do think one thing that is legitimate and concern is and this does impact many of the businesses folks in this room are invested in because there's so much uncertainty around software and again around a lot of white collar businesses, this resetting of multiples lower, I think that's just a fact of life.

Now it may be a few years from now some company will show they're clearly in a safer place but I wouldn't assume the 20 times multiples that existed 12 months ago for many of these businesses because they were seen as safe recurring revenues are going to persist even though on the ground today our portfolio companies are continuing to perform very well both in credit and in private equity. We all know it's going to be a more challenging time going forward. I think we have to accept lower multiples. That's just the price to pay and it does mean the liquidity in that area is tougher and it does mean you'll see markdowns in those areas. We took pretty significant markdowns in the first quarter against our private equity growth equity holdings in software. Fortunately, as a firm, it's six and a half percent of what we do overall. Nevertheless, this is real. And then I would say on the credit versus equity, it's been a fascinating dynamic that all the focus has been around private credit and software and yet the software is the senior 35% of the capital stack. And so yes, there will be cases where the debt loses money, but the real story here is what's the implication for equity values? What happens as the growth slows? As it's harder to hold on to management teams, this compression, what's going to happen? And as I said, in some cases these companies are going to do some remarkable things and people are not going to want just a large language model with their most proprietary information and so forth, but it's going to take very active management to get to the other side. So it's an area that's in the teeth of the storm, but for us we're pouring our resources to make our companies move into this new world as quickly as possible. So more part of a normal business cycle, not an outright disaster across the board and some companies will survive and be improved.