Blackstone says worries about AI data center debt are overblown

Blackstone, one of the world's biggest investment firms, says fears about the mountain of debt behind AI data centers are overblown. Jas Khaira, who leads its AI efforts, said last week at TechCrunch Disrupt that the market is jittery, but he does not see a repeat of the 2008 banking crisis.

Who is Blackstone in this story

Blackstone is a private equity giant that manages $1.3 trillion. It lends money to data centers and invests in AI companies. Khaira said it is the largest owner of computing power outside the biggest tech companies. That includes stakes in neoclouds, which are cloud providers that rent out AI chips, and in data centers.

Its first big loan of this kind came in 2023 to CoreWeave, for $2.3 billion. At the time, Khaira said, CoreWeave had only "30 million of revenue and minimal profitability." Blackstone felt comfortable because the loan was backed by CoreWeave's Nvidia chips and by contracts with customers like Microsoft.

Why the market is nervous

Khaira pointed to a mix of causes. Interest rates ticked up in September. Hotter-than-expected inflation suggests borrowing could get more expensive. A flood of AI infrastructure debt offerings is adding to the strain.

• Lenders are charging higher premiums, called credit spreads, on top of higher base rates.
• Even Meta and Microsoft now pay more to borrow.
• CoreWeave's debt has grown to about $50 billion, and its shares fell more than 20% in recent days.
• Firmus scrapped its planned Australian stock listing at a roughly $30 billion value.

Why he is not panicking

Khaira said this does not look like 2008, when shaky banks sat at the center of the problem. Most data centers are built for the largest tech companies, so the debt is ultimately backed, in his words, by "the most creditworthy companies in the world." He also said AI companies still cannot get enough computing power, which keeps the building going.

He was less sweeping about the payoff from AI itself. Asked whether Blackstone's own companies see gains, he said "there is definitely ROI, but it is uneven." He expects adoption to move in a "sawtooth-type pattern," which skeptics can read as too much computing capacity built too soon.

What it means for you

Blackstone has a stake in this story, so its optimism is worth weighing with that in mind. For everyday investors, the practical link is interest rates. If borrowing keeps getting pricier, tech stocks in a portfolio or retirement account could swing, and so could the cost of AI services over time.