Blackstone Q2 Profit Jumps 26% on AI Gains, AUM Reaches $1.35 Trillion

Blackstone reported a strong second-quarter performance, with distributable earnings rising 26% on a per-share basis to $1.52, beating LSEG analyst estimates of $1.35. The world's largest alternative asset manager benefited from a surge in asset sales and significant unrealized gains from its strategic investments in artificial intelligence, pushing its total assets under management to $1.35 trillion.

AI Strategy Drives Investment Gains

Blackstone's results underscore its successful pivot towards high-growth technology sectors, particularly artificial intelligence. CEO Stephen Schwarzman stated the firm decided to "lean into the artificial intelligence megatrend," a strategy that has positioned it as "a trusted partner at scale to many of the key innovators." The company noted that nine of its top ten best-appreciating investments are now linked to AI.

Key holdings driving this performance include a stake in AI firm Anthropic and a portfolio of data center businesses, such as QTS, which Blackstone took private in 2021 for $10 billion. The firm is also participating with Apollo in a $35 billion financing deal for custom chips intended for use by Anthropic.

Asset Sales Rebound

After a slower first quarter hampered by market volatility, Blackstone accelerated its pace of asset sales, realizing $31.8 billion in the second quarter. Notable transactions included the sale of a stake in three data centers to Digital Realty and a majority holding in power infrastructure company Sabre Industries to TPG.

The firm also benefited from the public listings of several portfolio companies, including advertising technology firm Liftoff Mobile, a data center investment vehicle named Blackstone Digital Infrastructure Trust, and Indian office REIT Bagmane.

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Retail Flows Show a Mixed Picture

While institutional demand remains robust, flows from wealthy individual investors, who account for nearly a quarter of Blackstone's AUM, presented a more varied picture. Concerns about AI's disruptive impact on software have created scrutiny across private markets, and some retail investors have sought to withdraw capital.

Key retail fund flows for the quarter include:

• Blackstone Private Credit Fund (BCRED): Raised $1 billion, down from $1.9 billion in the prior quarter and $3.7 billion in the same period last year.
• Blackstone Real Estate Income Trust (BREIT): Pulled in $1.2 billion while continuing to limit investor redemptions.
• Blackstone Private Equity Strategies (BXPE): Raised $2.4 billion.

Net returns from private credit improved to 0.4% from flat in the first quarter but remained significantly below the 2.2% return from a year ago. Despite the strong earnings report, Blackstone shares fell 2.1% in premarket trading, according to the source.