Most of what people want to know is what the other side thinks. I've been involved in some issues between the two countries where the primary objective is de-escalation.
Stephen Schwarzman is a Wall Street heavyweight. He co-founded Blackstone, the world's largest alternative asset manager. He helped private equity go from niche to mainstream. He also saw capitalism shift away from the public markets and into private ownership. And Blackstone was at the front of this trend. It pioneered and expanded the alternative assets industry. Blackstone is now in every corner of private markets. That means Blackstone mostly puts investors' money into private companies, real estate, and loans made outside the banking system, rather than simple portfolios of public stocks, bonds, or cash. But since many of these assets don't trade openly, it can be harder for outsiders to see what they're worth or how they're performing. Because of this and the size of private markets as a whole, some in markets are now worried. As for Blackstone, today it manages $1.3 trillion. In July 2026, it held more than 12,500 real estate assets and 250 portfolio companies. It went public in 2007. Schwarzman sits at the center of it all, with a view of Wall Street few others can claim.
Blackstone sits on hundreds of thousands of data points. How does that inform your decision on what to invest in next?
So when we started the business, I was always interested in having contemporary feedback, knowledge. If you give me enough information, I can see something in that pattern that doesn't make sense. Most people, when they're presented with something that doesn't make sense, they try to pay no attention to it because it interrupts their understanding of the world. I just focus on that, and it's a keystone to tell you where the world's going to shift.
Blackstone's portfolio companies give the firm deep insight into the broader economy. While traditional asset managers mostly own small stakes in public companies, Blackstone also takes majority or controlling stakes in private businesses, from healthcare and tech to consumer and more. All of this provides companies like Blackstone with more ways to see economic shifts before they show up in public data.
I'm quite confident that they'll be lowering rates. Some people are like overly enthusiastic about when they do it. We don't really care when they do it. It's just the fact that we're going to go from a period of rising rates to a period of lowering rates.
Sometimes though, a heads up about the next big thing can come from a chance exchange.
We did see the whole AI revolution, and that's just because of an accident. When I was in China in 2015, I was sitting on a bus with Jack Ma, who was the founder of Alibaba, and he started talking about that. And I literally had no idea what he was talking about, and he explained that this would be the most consequential technological change which would change the world. So I have a bunch of academic relationships, one of whom was the head of MIT. And he said, 'Jack's underselling this.' So I said, 'How do you know?' He said, 'Because we invented AI at MIT.' And we positioned the firm at Blackstone in this unique way where we bought a very large data center company in 2021 for $10 billion. It's now 15 times larger. We're the largest owner of data centers in the world. That puts us in touch with the six hyperscalers because we work for all of them, so we know what's happening sort of almost everywhere in this ecosystem.
Do you think that's luck that you found out, or is it that, you know, was it a skill to then be able to use it and dig deeper?
Part is sort of the network you have, and Blackstone, you know, we have a system where we learn information every week from every one of our businesses. Part of it is having the curiosity, because those pieces that don't fit tell you the future, and the future is always key to having a successful present.
During this AI data center thing, we learned that, you know, certainly the developed world is going to be short electricity. Now we've become huge investors in that area before other people did it.
But AI is costly, and its profit-making potential isn't proven. It needs energy, cooling systems, silicon, critical minerals, fiber optic cable, and more. Investors are flocking to every layer, and the market exploded. OpenAI is now valued at $852 billion. The AI company closed a $122 billion funding round intended to help with its costly push for more chips, data centers, and talent. The big story here in the Bay Area, in Silicon Valley, is Anthropic, the AI startup in talks to raise $30 billion. That would give it a $900 billion valuation.
Are you sure that these valuations in AI will come to fruition, or is there a danger that we're spending too much money and actually we don't, you know, real-time application will come much later and it will have to be at a much cheaper price?
There are a lot of precedents for this. So in 1882, Thomas Edison invented the electric light bulb, and to make it useful, you basically had to build a grid. So it took 40 years to build the electric grids. Certainly in the United States, nobody knew about radio. Nobody knew about television. Nobody ever thought about that when they were building out the grid. So we're in the early innings. There's so much capital infrastructure that needs to be built, and then the new products, and they'll create a lot of prosperity. In the interim, they'll have different stages of economic return, because if you just looked at the return in the first few years, it wouldn't make any sense. But in the longer term, we know that, that it did, although the people who invest the money at the beginning, some will make it to the end and some won't.
Blackstone helped supercharge private equity. They were one of the first big players to buy companies, mostly with borrowed money, remodel their operations and finances, and sell them off at a profit. It came into the business just as pensions, endowments, and corporate funds were putting money into private equity. Then it boomed. And after the 2008 financial crisis, Blackstone started lending to companies big banks couldn't serve because regulators had cracked down on the volume of high-risk loans those banks could issue. That market is known as private credit, loans made by non-bank lenders directly to companies. It is part of the broader shadow banking system or non-bank finance. It's ballooned since the crisis. Now it's worth $1.8 trillion and could double in size by 2030. Today, some investors are worried about risks building in private credit, with software companies a particular focus. And because these loans are private and rarely trade, investors don't have the same visibility they otherwise would have on their values in publicly traded stocks or bonds. As AI develops at breakneck speed, it's harder to see which software falls behind or becomes outdated. Some investors are already trying to pull their money from funds holding big software exposures.
Investors are again seeking exits from private credit funds this week. BCRED, the Blackstone flagship fund that they had put the redemptions in place around 5%, having seen a tick up in withdrawals.
Blackstone and others have limited withdrawals from some private credit funds after exit requests exceeded preset limits. These moves, designed to prevent asset fire sales and protect value, led critics to declare the asset classes riskier than many people realize.
I mean, is there something dangerous in private credit that you're seeing?
No, there's not. These funds are still generating roughly 9% returns, and defaults have gone up a little bit, and now people are worried about software exposures and-
Well, it's interesting. There was a small hedge fund that published a report that panicked the market and said that basically every software company's going to go bankrupt in the next two years. I was with the head of one of the three big AI companies. He said the software industry going bankrupt in two to three years is absolutely absurd. He said, 'We sell AI and tokens to these companies. They're going to be improving their businesses, and there'll be a certain percentage of software companies that are mispositioned for this new world.' I think we'll see, it'll take a year or two to play out that this was like way overdone. But once you panic people, it's tough to calm them down.
When I started at this, there were probably about 10 firms doing private equity. Now there are thousands of companies. The way you make money in private equity per se is you build great companies, you invest money, you have them grow faster. Cost-cutting deals were for the 1980s and maybe the 90s. The business has completely changed. The most amount of money can be made with the most growth, and people don't patronize places that are cost-cutting and don't deliver great value and a great product.
In the beginning, private equity mostly backed lower-profile firms like industrial businesses and unloved divisions of bigger companies. Now, private equity, like broader capital markets, backs all sorts of businesses, including pet shops, doctor's practices, and newspapers, a growing footprint that some people see as harmful to both consumers and society. Blackstone started buying houses after the 2008 financial crisis, under a subsidiary, Invitation Homes. They converted them into rentals, which they made into an asset you can invest in. Invitation Homes went public in 2017 and later became the largest single-family rental company in America with more than 80,000 homes. Blackstone doesn't own them anymore, but currently has about 60,000 US homes in its portfolio. Some lawmakers believe big investors are partly to blame for reducing the supply of homes available to ordinary Americans and tumbling home affordability.
There's been some, I guess, citizen anger at, for example, what's been done around real estate, right? So you buy housing and then prices go up and it prices people out of their homes or apartments. When you read that kind of criticism, do you think about it? Does it upset you? Do you think actually the industry should do better?
Well, I think housing is like a very unusual asset class. Last year, 2025, we built the same number of houses in the United States as we did in 1960. Is that even vaguely possible that the country's population has over doubled and we're still building the same number of houses, and people are surprised that the price of houses has gone up? So the solution for this is basically build more stuff. It couldn't be simpler. Private investors owned a few percent of houses. Some of it's a little concentrated in better areas.
The completed house stands as a witness to the pursuit of the American dream. Moving forward, Blackstone said it plans to offer loans to help build 50,000 US homes annually in order to stoke more construction and address the country's housing shortage. On the whole, private equity delivers different outcomes across industries. Although its role in housing is contested, it has played a vital part in backing innovation and growth in sectors like life sciences and infrastructure. Schwarzman grew up in the middle-class Philadelphia neighborhood of Huntingdon Valley. From age 10, he worked at his dad's shop.
What did your dad's curtains and linens store actually teach you about running a business?
