Blackstone Inc. delivered robust second-quarter results with distributable earnings rising 26% to $1.52 per share, significantly outperforming analyst expectations. According to reports from Bloomberg and BigGo Finance, the New York-based firm's distributable earnings of $1.52 per share comfortably exceeded the $1.35 consensus estimate from analysts polled by LSEG. The company reported Q2 distributable earnings of $2 billion, compared with analyst expectations of $1.7 billion. Blackstone's shares responded positively, rising 1% on Thursday after briefly declining, though the stock remains down more than 19% since the beginning of January, reflecting broader challenges for Wall Street's private money managers.
President Jon Gray highlighted that nine out of the top 10 appreciating investments are tied to data centers, energy, power and large language models, as reported by Bloomberg. CEO Stephen Schwarzman reinforced this strategy, stating the firm is "all-in on the artificial intelligence megatrend" and emphasizing their goal to become "a trusted partner at scale to many of the key innovators." However, in a post-earnings conference call, Schwarzman cautioned about the rapid expansion in AI, stating the firm is "mindful of the potential for excessive exuberance in this area" and has carefully chosen investment spots. He compared AI's impact to the Industrial Revolution, noting it will come faster and with greater complexity. The CEO emphasized that major technological changes create anxiety due to uncertainties about how the technology will evolve, requiring society to monitor developments and course-correct when necessary.
Total assets under management climbed to a record $1.35 trillion during the quarter, fueled by fresh inflows and valuation gains. According to BigGo Finance, Blackstone's conviction in AI is not just rhetorical, with the firm monetizing significant gains through strategic exits. The company sold a stake in three data centers to Digital Realty and offloaded a majority holding in power infrastructure company Sabre Industries to TPG, pushing total asset sales to $31.8 billion in the quarter. Blackstone clinched several major AI-related deals in the second quarter, including launching a $35 billion investment platform with Broadcom (AVGO) and Apollo Global Management to lower compute and power costs for training AI models. The firm also launched an AI cloud provider in partnership with Google parent Alphabet in May. Blackstone's data center empire remains a critical profit engine, with the firm having taken QTS private in a $10 billion deal back in 2021.
Blackstone's infrastructure business within its private equity division was the firm's best-performing major investment strategy, growing 7.2% over the quarter and 28.6% for the previous 12 months through June. As reported by BigGo Finance, the firm completed three initial public offerings in the quarter, including advertising technology company Liftoff Mobile, its newly created data center investment vehicle Blackstone Digital Infrastructure Trust, and Indian office REIT Bagmane. Gray expressed optimism about the IPO market, stating that dealmaking and listing activity was accelerating, with the firm having eight additional companies globally to take public this year. The firm also benefited from a wave of public listings, including the newly created data center investment vehicle.
Blackstone maintained a strong financial position with $228.1 billion of dry powder available for new investments in the second quarter. According to BigGo Finance, the firm's credit and insurance arm experienced a 6% decline in distributable earnings to $373 million for the second consecutive quarter, though it attracted $31 billion of capital inflows during the quarter. However, the retail-oriented Blackstone Private Credit Fund (BCRED) raised just $1 billion in fresh capital during the quarter, marking a sharp deceleration from $1.9 billion in the first quarter and $3.7 billion in the same period a year earlier. Performance in private credit has been tepid, with net returns for BCRED improving to 0.4% in the second quarter, still trailing the 2.2% return posted a year ago.
