Blackstone’s Jon Gray expects big tech to return to equity markets for AI

A theme has run through this week’s news: the AI buildout is being paid for more and more by selling shares, rather than only through cash flow and debt. On equity markets, heavier issuance by big tech companies translates into a larger supply of new stock and possible dilution for current shareholders. Prices around deals can come under pressure as a result, a point illustrated by Oracle’s $10 billion sale at a discount. Because the remarks come from the head of one of the biggest investors in data centers, they also convey confidence that AI demand is strong enough to warrant the spending. That helps infrastructure, power and chip suppliers, even when the companies doing the spending carry the funding load. For investors, the central issue is whether new equity is sold at a premium or a discount, which would reveal how ready markets are to keep bankrolling the buildout.

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The race to spend on AI is expanding beyond what cash flow and borrowing can fund, and Blackstone’s Jon Gray expects the biggest technology companies to seek more from equity investors.

Summary:

• Blackstone President Jon Gray said additional global equity fundraising will be required to match the huge demand generated by growth in the AI industry. Reuters provided the information.
• He said most large technology companies are expected to raise additional capital.
• Gray made his remarks on Tuesday during the Hong Kong Monetary Authority’s Global Financial Leaders’ Investment Summit.
• Blackstone, the largest alternative asset manager globally, manages almost $1.4 trillion and has made substantial investments in infrastructure tied to AI.
• The remarks come as Oracle prepares to sell $10 billion of shares and other big technology companies use equity markets to finance AI spending.

On Tuesday, Blackstone President Jon Gray said the artificial intelligence industry’s expansion has generated demand on a scale that will require additional global equity fundraising. He also said further capital raising is expected from most major technology companies.

Reuters reported that Gray made the comments at the Hong Kong Monetary Authority’s Global Financial Leaders’ Investment Summit. His remarks suggest an AI buildout whose financing requirements are growing beyond what the biggest companies can supply from operating cash flow and borrowing alone.

As the world’s largest alternative asset manager, Blackstone puts money into assets outside publicly traded stocks and bonds. It manages almost $1.4 trillion across private equity, real estate, credit, infrastructure, life sciences, growth equity, secondaries and hedge funds. Pension funds, insurance companies and individuals are among its investors. Under Chairman and Chief Executive Stephen Schwarzman, the firm has cast itself as a significant investor in the physical infrastructure that supports AI, such as data centers and energy. A joint venture to build a data center campus in Michigan is among its recent activities. Gray serves as president and is the company’s second-highest-ranking executive.

That lends Gray’s view particular weight, because Blackstone is on the supply side of the buildout and observes demand for capacity directly.

What Gray said fits a pattern that has emerged this week. Oracle is getting ready to price a $10 billion share sale, together with a matching bond offering, to finance its AI expansion, and is reportedly offering a discount of about 11% to draw buyers. In its latest shareholder letter, Pershing Square noted that Meta had announced a $98 billion equity raise. Anthropic is also getting ready for a public listing.

For investors, the move toward equity funding has two sides. It lets companies continue investing without overburdening their balance sheets, while also diluting current shareholders and adding a steady flow of new stock to the market. The readiness with which investors take up that supply, and the price they pay, is turning into an important gauge of confidence in the AI spending cycle.