The artificial intelligence infrastructure buildout will require increased equity financing as lenders face growing exposure to the companies driving the sector, Blackstone President Jon Gray said Tuesday. Speaking at the Hong Kong Monetary Authority’s Global Financial Leaders’ Investment Summit, Gray noted that the massive scale of capital required for AI is creating concentration risks for debt investors across the sector and at individual companies.
Unlike shareholders, who can benefit from a company's growth, lenders have limited upside because their returns are largely confined to interest and principal repayments, Gray said. He suggested that financing the buildout will require a combination of public markets, banks, and private capital, noting that companies are increasingly turning to structured transactions to limit debt levels. Gray added that cash generated by hyperscalers will also contribute to the necessary spending.
Pimco CEO Emmanuel Roman warned that the scale of AI financing could eventually exceed what markets can absorb. Citing an estimate from General Atlantic CEO Bill Ford, Roman said AI-related capital spending could reach approximately $10 trillion over the next five years. He noted that roughly $550 billion in AI debt has been issued in various forms so far this year.
Roman characterized the required capital as "gigantic" when compared to a global corporate bond market of roughly $20 trillion. “At some point in time, it’s going to be too much,” Roman said.
Despite these financing concerns, Gray remained bullish on AI infrastructure, stating that demand for computing power is currently running well ahead of supply. He reported that spending on AI models across Blackstone’s portfolio companies has risen 20-fold over the past year as businesses realize financial benefits from uses such as coding, content creation, and customer engagement. However, Gray noted that meeting demand remains difficult as securing chips, power, permits, sites, and capital becomes increasingly challenging.
Data center demand is expected to require approximately $8.5 trillion in capital spending over the next five years, according to a report from Goldman Sachs released Monday.
