Conversation with BlackRock CEO Larry Fink & Brookfield Corp CEO Bruce Flatt | Global Conference '26

It's certainly less than 1%.

Well, Mike, it's good to be here, and thank everybody.

We're both young, right? Let me just start with the conclusion. The United States is short power. We're short compute. We're short chips. And there are going to be shortages in all three and memory for things. I actually believe a new asset class will be buying futures of compute. We just don't have enough compute power right now. And you think about how many tokens you need to analyze, let's say, your cybersecurity, it is enormous. And we're reading all about the whole issues that's going on and that's just the huge opportunity, the amount of money that need to be going there. So we try to eliminate some of these shortages but I don't believe we're moving fast enough. There is not an AI bubble. There is the opposite. We have supply shortages. Demand is growing much faster than anyone has ever anticipated. And this is just a US phenomenon. We have not begun the whole concept of exploring the opportunities of AI around the world. And there's going to be some huge geopolitical questions as to who gets that technology. And so we, you know, the future is today. The AI phenomenon is happening faster than any of the programmers and the designers of this. The speed of intelligence is growing. The opportunity is very large. Yes, it's going to be disruptive, but it is also going to be very opportunistic and we have to talk about it. I believe as a country, as a world, we're not spending enough time working with government alongside the private sector to try to solve these very big issues. There was a slide of all the different capexes a second ago related to the railroads and all the other issues. The amount...

The capital expenditures for this is as Bruce suggested, 10 trillion dollars. That's just for the US. And let me also though bring back the whole notion what's going on in the Middle East where there's going to be huge opportunities there. But now because of drone warfare, we have to relook at all forms of security and the need for rebuilding the GCC region to rebuild it so it's going to be in a position where it's not going to be obstructed by drone warfare. So a lot of many more things are going to have to be underground. But even here in the United States, if we're going to be building, let's say, these one gigawatt data centers, how do we make sure we're protecting those 50 billion, 75 billion dollar investments? But we have to relook at everything because of the role of drone warfare. Right now, we're looking at it internationally, but you know, one of my concerns is could it be domestic terrorism using a $3,000 drone? So all of these things are actually opportunities, not problems. It's going to require, as we said, trillions of dollars of capital. Governments cannot build these out alone. They don't have the wherewithal. And two, their deficits are starting to be mounting. And we spend too little time talking about the US deficits and other countries' deficits. So this is going to all be the role of private sector. And Mike, I was going to just add that when you think of what's going on in private markets, so we have a trillion two of assets. It's all private things. 50% of the things that we own today did not exist as an investable asset class 15 years ago. So, it's not that we don't build pipelines and we don't build rail and we don't own all those things, but the incremental money in the world is going into the fiber backbone, cloud backbone, and now AI backbone. And 10 years from today, I expect that 50% number will be 75. And it's just the world is transforming and the infrastructure of the world is dramatically transforming and that's so you need to look at what's next, what's coming next and this buildout is very, very significant.

Over 50% of our assets of the 14 plus trillion dollars we manage are retirement assets. And so our investors are somebody who awarded us $1,000 of their savings through our IRA account. We also have investors who have allocated over a hundred billion dollars of their balance sheet to us. And I wrote about this in my last CEO letter. I think our investors are going to be more and more of those people, families, individuals who historically kept their money in a bank account. And what we've seen over the last 30 years, wages have not kept up with the role of capital. And what we're seeing worldwide, more and more countries are looking to build out their own capital markets. And building out their own capital markets through offering a more self-directed retirement plan. Actually, we just been hired by the Kingdom of Saudi Arabia to help them navigate away from a government sponsored retirement system to a direct personal defined contribution plan. Our partnership in India with Reliance is really trying to democratize investing and growing with India and investing in India. These are going to be our investors of the future and more and more countries are focusing on how to build out their own domestic capital markets. If you think of the success of Japan and where the Japanese stock market has gone since October 2023, it's not a coincidence that then Prime Minister Kishida announced the doubling of the tax exemption of their self-directed retirement account called NISA. And from that point on, the Japanese stock market doubled in valuation. And so there's a confluence going on right now that more and more countries are trying to have more and more of their citizens getting back to their liability and their assets instead of having your liability which is your liability of life, your duration of your existence. Having your money in a bank account is one of the worst financial decisions of a lifetime. And so trying to get more and more people to grow with our country and to invest side by side, that is the only way we are going to broaden economic success. We are not going to be able to broaden economic success only by wages because wages in this AI world are not going to grow as fast as the potential of the AI growth and the potential how and capital that is going to be invested in these investments will outperform.

Mike, the best is yet to come.

The best is yet to come.

Working with the hyperscalers is a fairly recent phenomenon. Before that, they were generating so much internal cash flow. They actually rarely went to the debt market. And we were, because we were one of the top two largest shareholders, we've known these companies for years and years and years and almost every hyperscaler I think we're either one, two or three of the largest shareholders. So we have deep relationship with them. But it wasn't until a few years ago where I had a breakfast with one of the major CEOs of one of the top few hyperscalers and their stock was trading around a 30 PE and I noticed before, you know, I did a little studying before I had the breakfast and I saw on their balance sheet they're owning a lot of data centers and at breakfast I told the CEO, I said, why do you own these? I said, you know, this is the beauty of the capital markets, you know, we would enjoy a 15% return plus or minus. It is dragging down your, ownership of data centers are actually dragging down your equity return. And from those conversations on, now you're seeing all these hyperscalers either raising a lot of debt or they're partnering with Brookfield or BlackRock or the other firms in terms of either trying to find financing or partnering whether they have the ownership of the data centers and doing it through debt which I don't believe is a good long-term solution for them or they're partnering with these big, large data centers that we all own. And it's much more capital efficient for these companies to be doing that and I think that's what you're witnessing right now. You know, look at as Bruce was talking about the role of AI and the need for, you know, the chips and the memory and the land and the compute and the electricity, the power, we're talking 50 to 75 billion dollars for a one gigawatt data center. We're actually going to be announcing a one gigawatt data center partnership with a hyperscaler this week. These are really complex things because of the, you know, as Bruce is talking about with Brookfield, we're both in the market of attracting long-term capital to work with these hyperscalers who have great, great financial needs. You think about on the behalf of the investors, you know, we're trying to secure a 15, 20 year lease with a AAA company. So it's a great return for a pension fund, for a 401k, for a sovereign wealth fund, for an insurance company. And so much of it is going to be financed by debt and that's going to be a big role of private credit in financing this build out of America. So I, you know, I believe ultimately we're going to see shortages of capital. The amount of capital that we need and if it going back to if more and more countries are going to be self-directing more of their savings domestically it's going to be putting some challenges here. And so we need to just be much more thoughtful about it. But, you know, right now, I look at this as a perfect opportunity for long-term investors to be part of this unbelievable once a lifetime growth opportunity and to be an investor in it.

Well, let me just carry on what Bruce said because I think this is what people are getting in touch with BlackRock. We organized the firm over the last 30 plus years to be at the nexus of both public and private markets but also in 2009 when we bought BGI, the nexus of passive and active which most people said you can't even merge those cultures and actually the stock market hated that acquisition in 2009 when we announced it, you can't marry a passive and active. At that time iShares had 340 billion and today it's $6 trillion. So I think you can marry passive and active and pivot around that on behalf of clients. And the same thing now goes for not just with public and privates but also public and privates and so having a one solution organization that can navigate around public and private markets, passive and active, overlaying with investment technology. This is why we are building this large platform that's, you know, pretty close to 15 trillion dollars today. Working side by side with our clients. It's all, as Bruce said, it's all solution-based, whether it's working with a RIA channel where we're providing models or taking over a whole portfolio of an entire pension fund or the whole wealth management platform of Citibank when they allocated over a hundred billion dollars to us. So it is working on a solution base across the path of an active public and private overlaying technology and then having those conversations with each and every client, sovereign wealth funds to insurance companies to pension funds. You know, we have a unique business model blending all that together and last year we were awarded over 700 billion of net inflows from clients and it is because we are working very close with our clients with this model.

I would just say with the AI economy, in every industry we're going to see a K economy. You're going to have one or two or three winners in each economy, in each industry, and many smaller firms are going to be forced to merge or do something. But I believe the capex that every company's going to have to spend just on AI itself is going to increase this K economy concept in every industry in the world.