Blackstone's Jon Gray Says AI Build-Out Needs More Equity as Lenders' Exposure Grows

Gray was speaking at the Hong Kong Monetary Authority's Global Financial Leaders' Investment Summit. He said the amount of capital AI needs is creating concentration risk for debt investors, both across the sector and at individual borrowers. Shareholders gain when a company grows, he noted, while lenders get little more than interest and the return of principal.

Pimco Chief Executive Emmanuel Roman, on the same panel, was blunter about the limits. Citing an estimate by General Atlantic CEO Bill Ford, he said AI-related capital spending could reach about $10 trillion over the next five years. He also said about $550 billion of AI debt in various forms has been issued so far this year.

Roman said that even with a mix of equity and debt, the sums would be "gigantic". He set them against a global corporate bond market of roughly $20 trillion. "At some point in time, it's going to be too much," he said, according to CNBC.

The warnings follow a Goldman Sachs report on Monday estimating that global data centre demand will require about $8.5 trillion of capital spending over the next five years.

How the Money Gets Raised

Gray said the build-out will be funded by a combination of public markets, banks and private capital, plus cash generated by the hyperscale cloud companies themselves. He said companies are increasingly using structured transactions to limit how much debt they carry. "The creativity is needed because the scale of capital is enormous," he said.

He is still positive on AI infrastructure. Gray said demand for computing power is "running well ahead of supply" and that spending on AI models across Blackstone's portfolio companies has risen 20-fold over the past year. He said businesses are seeing financial returns from uses such as coding, customer engagement and content creation. He added that securing sites, permits, chips, power and capital is getting harder.

Why It Matters

The remarks from two of the world's largest investors come as technology companies tap debt and equity markets at high volume. This week Oracle raised $20 billion, split evenly between shares and bonds, to fund its AI cloud expansion, and Alphabet sold €6 billion of euro-denominated bonds after its shares fell sharply on concerns about AI spending.

The question for investors, including Gulf sovereign funds that have become major backers of data centre and compute projects, is who carries the risk if the returns arrive more slowly than the spending. Gray's case for more equity is that shareholders, who share in the upside, should take on more of that risk than lenders, whose upside is capped.