Blackstone CEO Dismisses AI Bubble Fears: 'Critical Scarcity of Supply Has Intensified'

Stephen Schwarzman, the billionaire chairman and CEO of Blackstone (NYSE:BX), is not convinced that artificial intelligence (AI) is in a bubble. He argues that strong demand and constrained supply across the industry signal significant room for growth.

Stephen Schwarzman and Jon Gray Rebut AI Bubble Fears

Schwarzman, whose net worth exceeds $45 billion, says the AI boom has more room to run. He reiterated this in an earnings call after the company published its third-quarter earnings report: "Demand for compute is accelerating and we see no signs of that slowing down as AI use cases ramp for both businesses and consumers. There’s a critical scarcity of supply that has only intensified. Seldom in my career have I seen such a supply-constrained market of this scale."

Jon Gray, Blackstone’s president, also reiterated that he does not see an AI bubble. He argued that rising demand from both individuals and businesses is driving the ongoing expansion in capacity. Gray added that the situation differs from the dot-com bubble, when growth was not backed by real demand.

Indeed, top AI companies are making billions in revenue, a sign people are using their products. Anthropic made over $16 billion in the third quarter, while OpenAI’s annualized revenue in September was about $50 billion.

Gray and Schwarzman have a lot at stake as Blackstone has become one of the biggest investors in the AI sector. The company has amassed a $200 billion data center empire and embedded AI into the companies it controls.

Ken Griffin and Ray Dalio Have Warned of an AI Bubble as Stocks Retreat

Meanwhile, top billionaires such as Citadel’s Ken Griffin and Bridgewater Associates’ Ray Dalio have warned that the industry is in a bubble. In a recent statement, Dalio cautioned that the bubble could burst if interest rates rise.

Ken Griffin said that major economic transformations are almost always accompanied by a bubble. Nonetheless, he noted that such environments also produce real winners, pointing to companies like Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG), which survived and thrived.

The ongoing AI bubble fears have led to a sharp reversal in top companies. CoreWeave (NASDAQ:CRWV) stock dropped to $57 from a record high of $186. The Roundhill Memory ETF (CBOE: DRAM), which tracks the biggest companies in the memory industry, has dropped from $81 to $46.2. 

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