“It’s a one-way train”: The simple equation behind Blackstone’s bullish AI thesis

This interview was recorded on the 4th of March 2026

Thinking for the long term. It’s the bedrock of any investment philosophy, but remains the single biggest challenge when it comes to building a portfolio. As humans we’re notoriously bad at predicting the future, a flaw compounded by the barrage of headlines we face - whether they be about surging oil prices, the rise of AI, or the pain it’s about to inflict on entire industries.

But according to Viral Patel, CEO of BXPE, thinking in five- or ten-year horizons is the starting point for the firm’s private equity investment process.

Blackstone was founded in 1985 by former Lehman Brothers executives Stephen Schwarzman and Peter Peterson. Today it is the world’s largest alternative asset manager with US$1.3 trillion in AUM.

That scale provides access to insights and data that often paint a different picture to the headline of the day. Blackstone has investments in approximately 270 companies, owns 13,000 pieces of real estate and lends to over 4,000 borrowers.

“Each quarter we talk about what data and signals we’re seeing.

“What are the parts of the global economy that are accelerating? Where do we see deceleration? How do we want to position our portfolios?

“That exercise is what drives our ability to figure out where we want themes to go.”

So what is Blackstone seeing right now?

At the corporate level, Patel says company earnings are resilient, inflation remains in a good spot and the cost of capital is declining. Together, those three factors create a favourable environment for allocators looking to put money to work.

The data supports that view. US Private Equity Total Deal Value in 2025 was up 36% on the prior year, with appetite for “scaled private equity” particularly strong.

“So larger companies, ones that can withstand the volatility and the choppiness in the marketplace, can redo their supply chains and work on AI initiatives to enable their businesses. Those are the sorts of companies where you’re seeing activity increase the most.” Patel says.

The opportunity arising from artificial intelligence fits neatly within Blackstone’s philosophy of investing behind secular growth trends. Persistent bubble headlines may unsettle investors, but Patel argues that the underlying drivers are clear.

“If you look at AI products, look at the published reports around the revenue growth rates of OpenAI and Anthropic or what’s happening with Gemini, we believe that’s a one-way train that’s going upwards.”

Blackstone is investing across the AI value chain, but one of the clearest opportunities sits in energy. US power generation has been effectively flat for the past 20–25 years, with efficiency gains offsetting rising demand. That equilibrium began to shift last year as demand ticked higher.

Some forecasts suggest a 40% increase in capacity will be required over the next decade to support AI, electrification and reshoring - potentially fuelling a multi-trillion-dollar capex cycle.

Energy infrastructure such as power plants and transmission lines, battery technology to support storage needs, and service businesses focused on testing and maintenance are some of the ways Blackstone is positioning for that opportunity.

From durable themes to enduring business models

If AI is the poster child for investing today, the unsung heroes are the business models that have quietly delivered for decades.

Patel says Blackstone spends just as much time looking for businesses that have stood the test of time as it does looking for secular growth opportunities. Franchise models are a good example.

“If you find the right concept, you can have tremendously high growth, high margins and high free cash flow,” Patel says.

The model is simple. Once a brand resonates with customers, growth can accelerate as franchisees fund the rollout of new locations. Blackstone has leaned into this dynamic in recent years through investments in companies like Jersey Mike’s and 7 Brew Coffee, while an earlier investment in Hilton Hotels highlights just how durable the model can be.

But enduring business models extend well beyond franchising. Blackstone is also finding opportunities across what Patel calls the “physical economy” - areas tied to real-world experiences and services rather than digital disruption.

Travel and leisure remains a strong tailwind as consumers prioritise experiences. That has led Blackstone to invest in areas such as music publishing, theatre companies and restaurant chains.

“Consumer spend continues to move into experiences,” Patel says.

Even industrial sectors like aerospace and defence are attracting attention as governments ramp up spending and supply chains rebuild. AI may be a compelling growth story, and Blackstone is investing heavily behind it, but Patel is clear that some of the most compelling opportunities still lie in business models that have been working for decades.

Are private markets too big to ignore?

Blackstone’s growth has been built on developing expertise in private markets. Early adopters have primarily been institutional investors and family offices, where allocations can range from 25% to 50% of a portfolio.

These investors also tend to have longer time horizons, which aligns with the mindset required for private markets that don’t offer the daily liquidity of listed assets.

Adoption of alternatives across private wealth clients is growing but sits well below the levels of institutional investors. Blackstone's Private Wealth business has grown substantially in the past decade, with assets under management from the private wealth channel now exceeding $US300 billion across Blackstone funds.

No doubt some of that growth will have been driven by the prospects of higher returns, where historically private markets have delivered a premium over public markets. But perhaps the most compelling rationale for considering an allocation to private markets is the sheer scale of the opportunity set.

“If you look globally at companies that are greater than US$250 million in revenue, nearly 90% of those companies are actually in the private markets,” Patel explains.

It raises an interesting question: if you’re diversifying your portfolio across just 10% of the opportunity set, how much diversification are you really getting?

Learn more

For more insights from the team at Blackstone, please visit their website.