Key Takeaways
- • Blackstone senior figure Jas Khaira, speaking at TechCrunch Disrupt, said fears over AI-buildout debt are overblown, arguing that data center debt is ultimately backed by the most creditworthy companies in the world.
- • Blackstone, managing $1.3 trillion in assets, is financing AI infrastructure through compute-backed lending, with its first neocloud deal being a $2.3 billion loan to CoreWeave in 2023.
- • Blackstone co-led a $10 billion credit facility for Australian GPU provider Firmus alongside Coatue, and committed $5 billion as an investor in Crux AI, a neocloud launched with Google.
- • CoreWeave's debt has ballooned to about $50 billion and its shares dropped over 20% in recent days, while Firmus scrapped a planned ASX IPO at a target valuation of roughly $30 billion.
- • Khaira acknowledged higher credit spreads and rising base rates, and said ROI from AI adoption is 'definitely' present but 'uneven.'
Summary
Blackstone is positioning itself at the center of the AI buildout, according to firm veteran Jas Khaira, who spoke last week on stage at TechCrunch Disrupt. The firm is deploying capital across strategies, from large loans to data centers to investments in frontier AI models and applications. Earlier this year Blackstone launched Blackstone N1 (BXN1), a San Francisco-based hub for its AI initiatives, led by Khaira, who relocated from New York.
Khaira argued that Blackstone differentiates itself from traditional venture capital through compute financing and flexible capital structures spanning debt and equity. "We're the largest owner of compute outside of the hyperscalers today," he said. BXN1 has been involved in several compute deals, including Crux AI, a neocloud launched with Google to commercialize its custom TPUs, to which Blackstone committed $5 billion, and chip startup Etched.
Blackstone pioneered a financing model for venture-backed neoclouds, lending against both committed customer contracts and pledged GPUs. Its first such deal, in 2023 with CoreWeave, was a $2.3 billion loan, despite CoreWeave having only "30 million of revenue and minimal profitability" at the time, according to Khaira. The loan was backed by CoreWeave's Nvidia GPUs and its contracts with customers such as Microsoft. That structure has since been replicated by Blackstone and other credit providers across billions in follow-on debt to CoreWeave and rival neoclouds. Khaira said the key underwriting question is the customer's credit quality, with risk priced relative to investment-grade counterparties such as Microsoft or Meta.
Khaira acknowledged mounting strains. CoreWeave's debt has reached about $50 billion, and Altimeter Capital founder Brad Gerstner told CNBC that GPUs alone are no longer adequate collateral. Khaira cited rate increases in September, hotter-than-expected inflation, and heavy AI infrastructure debt issuance as contributors, along with wider credit spreads that raise the cost of debt even for Meta and Microsoft. Firmus's cancelled IPO, which had targeted roughly $30 billion, reflected market pricing pressure; Khaira said "the market wasn't there at that valuation."
Despite these pressures, Khaira rejected comparisons to the 2008 financial crisis, saying "This doesn't feel like something where you've got 2008 banks that are shaky credits." He added that demand for compute remains strong. Blackstone is also deploying AI across its portfolio through Ode, a $1.5 billion joint venture formed with Anthropic and Hellman & Friedman, which supplies forward-deployed engineers to Blackstone's 280 portfolio companies. Khaira said ROI is real but uneven, describing adoption as a "sawtooth-type pattern."
Khaira argued that Blackstone differentiates itself from traditional venture capital through compute financing and flexible capital structures spanning debt and equity. "We're the largest owner of compute outside of the hyperscalers today," he said. BXN1 has been involved in several compute deals, including Crux AI, a neocloud launched with Google to commercialize its custom TPUs, to which Blackstone committed $5 billion, and chip startup Etched.
Blackstone pioneered a financing model for venture-backed neoclouds, lending against both committed customer contracts and pledged GPUs. Its first such deal, in 2023 with CoreWeave, was a $2.3 billion loan, despite CoreWeave having only "30 million of revenue and minimal profitability" at the time, according to Khaira. The loan was backed by CoreWeave's Nvidia GPUs and its contracts with customers such as Microsoft. That structure has since been replicated by Blackstone and other credit providers across billions in follow-on debt to CoreWeave and rival neoclouds. Khaira said the key underwriting question is the customer's credit quality, with risk priced relative to investment-grade counterparties such as Microsoft or Meta.
Khaira acknowledged mounting strains. CoreWeave's debt has reached about $50 billion, and Altimeter Capital founder Brad Gerstner told CNBC that GPUs alone are no longer adequate collateral. Khaira cited rate increases in September, hotter-than-expected inflation, and heavy AI infrastructure debt issuance as contributors, along with wider credit spreads that raise the cost of debt even for Meta and Microsoft. Firmus's cancelled IPO, which had targeted roughly $30 billion, reflected market pricing pressure; Khaira said "the market wasn't there at that valuation."
Despite these pressures, Khaira rejected comparisons to the 2008 financial crisis, saying "This doesn't feel like something where you've got 2008 banks that are shaky credits." He added that demand for compute remains strong. Blackstone is also deploying AI across its portfolio through Ode, a $1.5 billion joint venture formed with Anthropic and Hellman & Friedman, which supplies forward-deployed engineers to Blackstone's 280 portfolio companies. Khaira said ROI is real but uneven, describing adoption as a "sawtooth-type pattern."
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