Business · Companies · 4 hrs ago
Blackstone executive says fears over AI debt are overblown
Blackstone is investing heavily in AI, including lending to data centers and cloud providers and backing AI companies.
The investment group Blackstone N1, based in San Francisco, coordinates its AI initiatives and is led by firm veteran Jas Khaira.
AI requires much more capital than earlier technology shifts, making lenders and investors such as Blackstone important to its growth.
In 2023, Blackstone gave cloud provider CoreWeave a $2.3 billion loan, backed by Nvidia GPUs and customer contracts including one with Microsoft.
That financing approach helped support later loans to CoreWeave and other providers, while Blackstone has also backed companies including Crux AI and chip startup Etched.
CoreWeave’s debt has grown to about $50 billion, and higher interest rates, inflation and credit costs have added to concerns about AI infrastructure borrowing.
Khaira says the fears are overblown, but the available information does not say what Blackstone or borrowers will do next.
Blackstone executive Jas Khaira said fears about debt tied to the AI buildout are overblown.
Blackstone is financing AI infrastructure and companies through loans and investments, including lending to neocloud operators.
The firm says it assesses lending risk partly by looking at customers’ credit quality and the value of pledged GPUs.
Concerns have grown as neocloud debt has risen, interest rates and credit spreads have increased, and inflation has remained higher than expected.
CoreWeave’s debt has grown to about $50 billion, and investor Brad Gerstner said its GPU collateral was no longer sufficient for cheap debt.
- Who
- Jas Khaira, who leads Blackstone N1, said the fears were overblown.
- What
- Khaira discussed Blackstone’s AI investments and lending, and concerns about debt accumulated by AI infrastructure companies.
- When
- Khaira spoke at TechCrunch Disrupt last week. He said concerns had risen in recent weeks.
- Where
- TechCrunch Disrupt. Blackstone N1 is based in San Francisco.
- Why
- AI requires large amounts of capital, and Blackstone sees financing opportunities. Concerns reflect rising debt, interest rates, inflation and credit spreads.
Blackstone executive Jas Khaira
Altimeter Capital founder Brad Gerstner
AI debt risks
Blackstone executive Jas Khaira
Khaira said fears over AI-buildout debt were overblown.
Altimeter Capital founder Brad Gerstner
Gerstner said CoreWeave’s GPU collateral was no longer good enough to support cheap debt.
Blackstone made its first such neocloud financing deal with CoreWeave, which sought a $2.3 billion loan.
Blackstone launched Blackstone N1, its San Francisco-based hub for AI initiatives.
Blackstone co-led a $10 billion credit facility for Australian GPU provider Firmus.
Khaira spoke about Blackstone’s AI investments and financing at TechCrunch Disrupt.
Khaira said large debt burdens at neocloud operators had begun to raise red flags.
- Blackstone assets under management
- $1.3 trillion
- Blackstone N1 location
- San Francisco
- CoreWeave loan sought in 2023
- $2.3 billion
- CoreWeave debt
- About $50 billion
- Firmus credit facility
- $10 billion
What people are saying
We’re the largest owner of compute outside of the hyperscalers today, whether it’s investments in neo clouds, investments in data centers, and being able to use that compute strategically to support companies
One of the primary things that we’re looking to is the nature of the customer. And if the customer is an investment-grade customer — let’s say it’s Microsoft or let’s say it’s Meta — the risk gets priced relative to that customer
We’re also seeing higher credit spreads
The collateral that CoreWeave is putting up which is really only GPUs is not good enough anymore. They used that in the past to get cheap debt.